2014 (11) TMI 392 - HC - Service Tax

Waiver of pre deposit - transportation of Air Cargo service - Financial hardship - Held that - There is force in the plea of the appellant regarding undue hardship and financial difficulty in pursuing the appeal on payment of the pre-deposit as ordered by the Tribunal. The same, therefore, requires to be modified considering the prima facie case of the appellant - order of the Tribunal is modified to the effect that the appellant shall make a pre-deposit of ₹ 50,00,000 less the amount already deposited, if any, towards pre-deposit - Partial stay granted.

Summary

Issues:
Challenge to Customs, Excise and Service Tax Appellate Tribunal's order regarding service tax liability. Appeal for waiver of pre-deposit due to financial crisis and hardship.

Analysis:
The Civil Miscellaneous Appeal challenges the Customs, Excise and Service Tax Appellate Tribunal's order dated 10.06.2014 concerning service tax liability amounting to Rs. 1,60,82,229. The appellant provided services for Malayasian Airlines related to Air Cargo transportation, including issuing Air Way bills. A show cause notice was issued on 29.7.2010, leading to an order on 14.12.2011 confirming the service tax demand, interest, and penalty. The appellant appealed to the Tribunal, seeking waiver of pre-deposit. The Tribunal had previously granted waiver in a similar case involving ocean freight but directed a 50% pre-deposit in this case. The appellant, facing financial hardship, requested a complete waiver based on the company's financial crisis evident from the balance sheet ending 31.3.2014.

In response to the appellant's plea of undue hardship and financial difficulty, the Court noted the appellant's genuine financial crisis and modified the Tribunal's order. Citing the Supreme Court's decision in Benara Valves Ltd. v. CCE, the Court highlighted the need to balance interests, considering undue hardship and revenue protection. Section 35-F of the Act mandates depositing duty demanded pending appeal unless undue hardship is proven. Undue hardship refers to disproportionate economic burden, and the Tribunal must impose suitable conditions to protect Revenue interests. The Court emphasized the importance of balancing undue hardship and Revenue protection in such cases.

Consequently, the Court modified the Tribunal's order, reducing the pre-deposit amount to Rs. 50,00,000, to be paid by 12.12.2014. Upon compliance, the balance amount demanded would be waived, and collection stayed during the appeal. The Tribunal was directed to proceed with the appeal based on the payment received. The decision aimed to address the appellant's financial crisis while ensuring Revenue protection and fair proceedings.