2015 (12) TMI 1498 - HC - Service Tax

Waiver of pre deposit - Section 35F - whether the amended provisions of Section 35F of the Central Excise Act, 1994, would be applicable or the unamended provisions of Section 35F of the Central Excise Act, 1994, would be applicale and what are the requirements to be fulfilled under the required provision - Overriding Commission - Held that - As per the decision of the Hon ble Supreme Court, in the case of Garikapatti Veeraya v. N.Subbaiah Choudhry and others 1957 (2) TMI 54 - SUPREME COURT , the right of appeal 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. - Thus, it is clear that the law applicable to the case of the assessee is the unamended provision of Section 35F of the Act, As the assessee was of the strong view that, the assessee has a better case on the issue of liability and perhaps carried away by this view, it did not raise the issue regarding the financial hardship. However, the Tribunal is expected to exercise its discretion, vested under the unamended provisions of Section 35F of the Act. In this case, there is a failure to exercise the discretion, as the Tribunal had lost sight of the provision applicable to the case, having regard to the date of filing of the appeal. When the Tribunal had failed to exercise the discretion, this Court is bound to interfere. Further, the order passed by the Tribunal did not indicate that, it has considered the materials to come to a prima facie conclusion. Hence, the order is liable to be set-aside, as the order had been passed, invoking the amended provisions of Section 35F of the Act, whereas the law applicable to the case of the assessee is proviso to unamended Section 35F of the Act. - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
1. Whether the appellant is liable to pay service tax on the alleged Overriding Commission received.
2. Whether the order directing pre-deposit of Rs. 20,00,000 by the first respondent is justified under the amended provisions of Section 35F of The Central Excise Act, 1994.
3. Whether the unamended provisions of Section 35F of The Central Excise Act, 1994 apply to the case of service tax appeals filed before August 6, 2014.

Analysis:
Issue 1:
The appellant, a Company acting as a General Sales Agent for an airline, challenged a demand for service tax on the Overriding Commission received. The appellant argued that the commission falls under 'export of services' and is not liable for service tax. However, the Commissioner directed payment of the service tax. The appellant appealed, contesting the liability to pay service tax.

Issue 2:
The main contention was whether the order directing pre-deposit of Rs. 20,00,000 was justified. The appellant argued that as there was no liability to pay service tax, the pre-deposit order was against the law. The respondents contended that the pre-deposit was mandatory under the amended provisions of Section 35F of The Central Excise Act, 1994.

Issue 3:
The court analyzed whether the amended provisions of Section 35F applied to service tax appeals filed before August 6, 2014. It was established that the law prevailing at the time of filing the appeal governs the right of appeal. As the appellant's appeal was filed before the amendment, the unamended provisions of Section 35F were deemed applicable.

The court found that the order directing pre-deposit was non-speaking and failed to consider the prima facie case or the financial position of the appellant. The court emphasized that the appellate authority should balance the interests of the Revenue and the appellant. As the order was passed invoking amended provisions while the unamended provisions were applicable, it was set aside, and the matter was remitted back for fresh consideration based on the unamended provisions.

As a result of the remand, the appellant was permitted to submit an application regarding financial hardship, and the Tribunal was directed to consider it within two weeks. Until the final order, no action was to be taken based on earlier orders. The Civil Miscellaneous Appeal was disposed of accordingly.