2015 (3) TMI 634 - HC - Service Tax

Waiver of pre-deposit - whether the petitioner would have to deposit the amount of 7.5% of the tax confirmed against him, as a condition for pursuing the appellate remedy before the Tribunal - Business auxiliary services - business of lending money to customers, against gold that was pledged by the said customers with the petitioner - Held that - the institution of a suit carries with it an implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit and, further, that the right of appeal that is vested is to be governed by the law prevailing at the date of institution of the suit or proceeding, and not by the law that prevails at the date of its decision or at the date of filing of the appeal. The petitioner, in whose case also the lis commenced in 2012, would not be required to deposit the amount of 7.5%, as required pursuant to the 2014 amendment, and in that respect, he would have an efficacious alternate remedy before the Tribunal where he can file an appeal, together with an application for waiver of pre-deposit and stay of recovery of the amounts confirmed against him. If the petitioner prefers a duly constituted appeal under the provisions of the Finance Act, 1994, as they stood prior to 16.08.2014, then the Appellate Tribunal shall number the Appeal, and consider the application filed by the petitioner for waiver of pre-deposit and stay of recovery of the amounts confirmed against him by Ext.P8 order, on merits, and thereafter, proceed to hear the appeal itself in due course. - till 31.03.2015, no steps for recovery of the amounts - The writ petition is disposed as above

Summary

Issues:
Challenge against Ext.P8 order confirming service tax and penalty on the petitioner.

Analysis:
The writ petition challenged Ext.P8 order confirming a demand of service tax and penalty on the petitioner. The demand was under business auxiliary services due to the petitioner's engagement in lending money against pledged gold, subsequently assigned to banks. The authorities treated the difference between purchase price and book value of receivables as consideration for services rendered. The petitioner argued that disclosures were made in balance sheets, and the amounts received were interest on loans, not service consideration. The petitioner also contested the computation of demand, invoking larger limitation periods, and estimation for certain periods.

Alternative Remedy and Limitation:
The respondents argued the petitioner had an alternate remedy to appeal before the Customs, Excise and Service Tax Appellate Tribunal. They highlighted the amendment requiring a 7.5% deposit for appeals post-August 2014. The respondents defended the use of Sections 72 and 73 of the Finance Act, stating show cause notices were correctly issued. The court noted the petitioner's right to appeal, considering the law prevailing at the suit's institution. The petitioner was not required to deposit 7.5% under the 2014 amendment, preserving their appeal rights under the prior law.

Judgment and Order:
The court dismissed the writ petition, directing the petitioner to appeal before the Tribunal without pre-deposit, as per the law pre-August 2014. The Tribunal would consider the waiver application and hear the appeal accordingly. The petitioner was instructed to file the appeal and waiver application by a specified date, with a stay on recovery proceedings until then. The court emphasized no recovery steps should be taken by the respondents until the specified date.