2014 (6) TMI 355 - HC - Service Tax

Waiver of pre deposit - demand of service tax on GTA services from recipient of services being proprietary concern - Held that - some more leniency ought to have been shown to the appellant in the matter. Accordingly, taking into consideration the factual issues involved in the matter, we are of the opinion that interest of justice will be served by directing the appellant to pay only an amount of Rs.35 lakhs instead of Rs.70 lakhs as directed by the Tribunal. - stay granted partly.

Issues involved:
Interpretation of service tax liability, pre-deposit amount determination, leniency in tribunal's decision, consideration of factual issues, modification of tribunal's order.

Interpretation of service tax liability:
The case involved a dispute over service tax liability where the appellant, engaged in transportation and equipment hiring, contested the amount demanded by the authorities. The appellant argued that as a transporter, the original service provider should be liable for the service tax, not them. The Tribunal, however, disagreed with the appellant's contention and directed a pre-deposit of Rs.70,00,000 to stay recovery during the appeal. The appellant had already deposited Rs.1.5 lakhs out of the total demand of Rs.71.5 lakhs, claiming the actual liability to be Rs.7,90,842. The court analyzed the factual issues and the contentions presented by both parties to determine the correct interpretation of the service tax liability.

Pre-deposit amount determination:
The Tribunal had initially directed the appellant to deposit Rs.70,00,000 as a pre-deposit to stay recovery pending the appeal. The appellant argued for a lower amount based on their interpretation of the service tax liability. The court, after considering the overall situation and the contentions raised, decided that the appellant should only be required to deposit Rs.35,00,000 instead of the original Rs.70,00,000 directed by the Tribunal. This modification in the pre-deposit amount was deemed appropriate by the court based on the factual issues and the interest of justice.

Leniency in tribunal's decision:
The court noted that the Tribunal had taken a lenient view by directing the payment of Rs.70,00,000 as the pre-deposit amount, considering the total liability of the appellant to be Rs.2.15 crores. However, the court believed that further leniency was warranted in this case. After evaluating the facts and contentions, the court decided that directing the appellant to pay only Rs.35,00,000 would serve the interest of justice better than the original amount set by the Tribunal.

Consideration of factual issues:
Both parties presented their arguments based on the factual issues surrounding the service tax liability of the appellant. The appellant claimed exemption based on their role as a transporter, while the department argued for a higher liability amount. The court carefully considered these factual issues, the contentions raised by each party, and the materials presented before making a decision on the appropriate pre-deposit amount and the interpretation of service tax liability.

Modification of tribunal's order:
In conclusion, the court partially allowed the appeal and modified the Tribunal's order. The appellant was permitted to deposit only Rs.35,00,000 instead of the original Rs.70,00,000 directed by the Tribunal. The court also instructed the Tribunal to expedite the appeal process and dispose of the case within six months from the date of the judgment. This modification aimed to balance the interests of both parties while ensuring a fair resolution based on the factual issues presented during the proceedings.

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