2013 (2) TMI 217 - HC - Service Tax

Waiver of pre-deposit - petitioner will not fall under the category of service and therefore, the question of making any pre-deposit does not arise - Held that - Main plea of the petitioner is the question of applicability of service tax itself to the petitioner & it is for the appellate authority to take a decision on the said question and therefore, when the appeals are pending before the appellate authority, such a question raised by the petitioner in these Writ Petitions, is a matter for examination by the appellate authority. The undue hardship and other difficulties expressed by the petitioner, much less what is now claimed, are not available in the present circumstances and the first respondent himself has come to a conclusion to reduce the pre-deposit amount with a lenient approach. Therefore there is no merit in these Writ Petitions. The petitioner shall pay the pre-deposit amount as ordered by the first respondent in the impugned order, within a period of two weeks from today, and on such payment, the first respondent-appellate authority shall dispose of the appeals themselves, on merits and in accordance with law, within a period of four weeks thereafter - writ dismissed.

Summary

Issues:
Challenge to pre-deposit-cum-appeal orders in two Writ Petitions; Liability to pay service tax; Applicability of service tax to activities of the petitioner; Consideration of undue hardship for waiver of pre-deposit; Disposal of appeals by appellate authority within a specified time frame.

Analysis:
In both Writ Petitions, the challenge was against pre-deposit-cum-appeal orders passed by the Commissioner of Central Excise (Appeals). The petitioner sought to quash the orders as unlawful and unsustainable, requesting a direction for the disposal of appeals without insisting on any pre-deposit. The petitioner argued that they were not liable to pay service tax as their activities did not fall under the category of "service," claiming the pre-deposit amount of Rs. 8.25 lakhs was excessive and would cause severe hardship.

The Revenue contended that pre-deposit is mandatory for appealing against the original authority's order, citing provisions of the Finance Act and the Central Excise Act. The first respondent had reduced the pre-deposit to 19% considering the petitioner's grievances, the prima facie case, balance of convenience, and financial burden. The original authority had demanded Rs. 41,86,929 as service tax, with the first respondent ordering a pre-deposit of Rs. 8.25 lakhs to be paid in cash by a specified date, failing which the appeal would be dismissed automatically.

The Court emphasized the need to consider the party's capacity to pay the pre-deposit amount and assess any financial burden or undue hardship in claiming a waiver. Referring to a previous decision, the Court highlighted that undue hardship, prima facie case, balance of convenience, and financial burden must be weighed to grant a waiver of pre-deposit. The main issue raised by the petitioner was the applicability of service tax to their activities, a matter for the appellate authority to decide. The Court found no undue hardship or merit in the Writ Petitions, as the first respondent had already reduced the pre-deposit amount.

Despite dismissing the Writ Petitions, the Court directed the petitioner to pay the pre-deposit within two weeks and ordered the appellate authority to dispose of the appeals within four weeks from the payment. This decision aimed to ensure timely resolution while upholding the pre-deposit requirement and the appellate process.