2013 (10) TMI 1063 - HC - Service Tax

Service for providing the cash van Provided to Bank and Financial Institution - Scope of service u/s 65 (105) (105) (W) of Finance Act Waiver of Pre-deposit - Tribunal rejected the stay application - Held that - The Tribunal was not sure pertaining to the fact that the services provided to the Bank and Financial Institutions is a taxable service or not - Appellant submitted that they are going to close the business of the appellants due to this demand - the tax can be collected like a honeybee but without damaging the flower Relying upon Assistant Collector, Central Excise vs. Dunlop India Ltd. & Ors. 1984 (11) TMI 63 - SUPREME Court Appellant is directed to deposit seventy five lakhs rupees as pre-deposit Upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
- Appeals filed under Section 35G of the Central Excise Act, 1944 against a consolidated order passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi.
- Request for stay of demand made by the Central Excise & Service Department, Lucknow.
- Interpretation of the definition of 'service' in terms of Finance Act, 1994 for providing "cash van" services.
- Allegations of illegal search, levy of penalty and interest, and inclusion of "cash van" for service tax.
- Consideration of financial conditions of the appellants and validity of the search operation.
- Tribunal's rejection of the stay request and lack of clarity on the taxable nature of services provided.
- Application of legal precedents for granting stay on the demands.

Analysis:
The appeals were filed under Section 35G of the Central Excise Act, 1944 against a consolidated order by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi, seeking a stay on the demand made by the Central Excise & Service Department, Lucknow. The appellants, engaged in providing "cash van" services to Banks and Financial Institutions, contested the tax liability imposed by the Department, amounting to significant sums in each case. The crux of the matter revolved around the interpretation of the definition of 'service' under the Finance Act, 1994, with the appellants arguing that their services fell outside the taxable ambit. They raised concerns about an allegedly illegal search, treatment of credit entries as service receipts, and imposition of penalty and interest. The Tribunal's initial rejection of the stay request prompted a detailed legal argument from both sides.

The appellants' counsel contended that the Tribunal's order demanding the entire assessed tax amount failed to consider the financial constraints of the appellants and the legality of the search operation. The counsel highlighted discrepancies in the search warrant and the targeted premises, questioning the authority of the tax levy and penalties imposed. On the contrary, the Department's standing counsel defended the demand, asserting the taxable nature of the services and the necessity of the search operation due to non-payment of taxes by the appellants. The Tribunal's uncertainty regarding the taxable status of the services provided added complexity to the case.

In a significant turn, the Court, after considering the arguments and legal precedents, directed the appellants to deposit specified amounts within a stipulated period to secure a stay on the remaining demands. Citing the need to balance tax collection with the appellants' financial situation, the Court invoked legal principles from relevant cases to grant the stay on certain conditions. By emphasizing the importance of fair treatment and adherence to legal standards, the Court provided a nuanced resolution to the contentious issue of tax liability, ensuring a balanced approach to the demands raised by the Department.