2014 (5) TMI 803 - HC - Service Tax

Waiver of pre deposit - service tax on chit funds - Whether despite divergent views of two High Courts on the same issue, the Tribunal was right in holding that the Appellant has not made out a prima facie case and therefore directing the Appellant to deposit additional ₹ 30 lakhs to make the entire amount of assessed duty liability deposited at the Stay stage - Held that - Even if there is a provision in the Finance Act, it will not applied to all forms of cash management and it would not be liable to service tax. That was a case dealt with and in the context of chit funds. The Andhra Pradesh High Court s judgment was holding the field. It was cited before the Kerala High Court but a learned single Judge of the Kerala High Court has taken a different view. To our mind, when there were two views before the tribunal and on a legal point, then, a prima facie case was made out and for waiver of pre-deposit. Moreso , when the appellant has already deposited a sum by way of service tax and by way of interest. In such circumstances, the amount was substantially secured. In the light of the legal argument canvassed and it requiring serious consideration, this was a fit case where the demand for balance deposit could have been waived - Stay granted.

Summary

Issues:
1. Correcting dates in the impugned order.
2. Interim order passed by the tribunal on an application for stay.
3. Discretionary nature of the order and the demand amount.
4. Interpretation of conflicting judgments from different High Courts.
5. Prima facie case for waiver of pre-deposit.

Analysis:
1. The judgment begins with granting leave to amend the impugned order to correct the dates promptly.
2. The appeal is filed by the assessee against an interim order by the tribunal, directing the deposit of the remaining service tax amount within a specified period.
3. The appellant argues that the tribunal erred by not considering the debatable nature of the demand, especially in light of conflicting High Court judgments, and essentially dismissing the application.
4. The revenue contends that the order is discretionary and necessary to secure the demanded amount, including interest and penalty, without any arbitrariness.
5. The Court, after reviewing the arguments, finds that the tribunal failed to adequately consider the prima facie case and balance the equities at the interim stage, leading to the admission of the appeal on the substantial question of law.
6. Upon final hearing, the Court notes the legal argument presented and the conflicting views of the Andhra Pradesh and Kerala High Courts on the issue, emphasizing the need for a prima facie case for waiver of pre-deposit, especially when a significant amount has already been deposited by the appellant.
7. Consequently, the Court quashes the impugned order, allows the waiver of pre-deposit of a specific amount until the final disposal of the appeal, and clarifies that this decision does not bind the tribunal's final decision on the appeal's merits.

This detailed analysis covers the correction of the impugned order, the arguments regarding the interim order, the discretionary nature of the demand, the conflicting High Court judgments, and the establishment of a prima facie case for waiver of pre-deposit, leading to the final decision of the Court.