2013 (4) TMI 374 - HC - Service Tax

Stay - erection, commissioning or installation service - 65 (39a) of the Finance Act 1994 as amended. Commissioner (appeals) oredered party deposit - Held that - With regard to the undue hardship and other difficulties expressed by the petitioner, much less what is now claimed, the respondent himself has come to a conclusion while ordering the pre-deposit amount with a lenient approach. Therefore, in my considered opinion, there is no merit in this writ petition. However the petitioner made a plea that time may be given for payment of pre-deposit amount. Taking into account the above submissions made by the petitioner, he shall pay the pre-deposit amount as ordered by the respondent in the impugned order, within a period of two weeks from the date of receipt of a copy of this order, and on such payment, the respondent shall dispose of the appeal itself, on merits and in accordance with law, within a period of four weeks thereafter.

Summary

Issues:
Challenge to proceedings of respondent under Central Excise Act and Finance Act, 1994 - Quashing of Pre-deposit-cum-Appeal Order - Capacity to pay pre-deposit amount - Undue hardship - Prima-facie case - Balance of convenience - Financial burden - Disposal of appeal by respondent.

Detailed Analysis:
The petitioner challenged the respondent's proceedings under the Central Excise Act and Finance Act, 1994, seeking to quash Pre-deposit-cum-Appeal Orders 163 and 164/2013. The petitioner, engaged in street light supply and installation, received show cause notices for service tax imposition. The Additional Commissioner confirmed the demand, leading to an appeal with a pre-deposit requirement of Rs. 25 lakhs by the respondent. The petitioner argued the pre-deposit amount was excessive and would cause severe hardship, emphasizing the respondent's failure to consider the case's merits, capacity to pay, and amount involved.

The respondent contended that pre-deposit upon appeal is mandatory under the Finance Act or Central Excise Act, with any hardship to be reviewed by the authority. The respondent had ordered the pre-deposit after considering the petitioner's grievances, including the prima-facie case, financial burden, and difficulties. The respondent's decision included a pre-deposit of Rs. 25 lakhs to be paid in cash, with automatic dismissal of the appeal if not paid by the specified date.

The court noted the settled law requiring consideration of the party's capacity to pay the pre-deposit amount, along with undue hardship and financial burden. Citing a previous decision, the court emphasized the importance of balancing factors like prima-facie case and convenience before granting a waiver of pre-deposit. The court found no merit in the petitioner's claim of undue hardship, as the respondent had already taken a lenient approach in ordering the pre-deposit amount.

Despite dismissing the writ petition, the court considered the petitioner's request for additional time to pay the pre-deposit amount. The court directed the petitioner to pay the pre-deposit within two weeks, with the respondent instructed to dispose of the appeal within four weeks after payment. With these directions, the court disposed of the writ petition without costs, closing the connected miscellaneous petition.