2016 (7) TMI 365 - HC - Service Tax

Waiver of pre-deposit - Maintainability of writ petition against the order confirming the demand of service tax with interest and penalty - alternative appellate remedy - the submission of the learned counsel for the petitioner is that the petitioner should be permitted to go before the Tribunal with a direction to the Tribunal to take up the stay application, thereby bypassing the pre-deposit condition, which has been made mandatory with effect from 6.8.2014. Held that - this Court is of the view that the relief sought for to direct the petitioner to approach the Tribunal and file a stay application with a further direction to the Tribunal to hear the same thereby waiving the condition of pre-deposit of 7.5%, cannot be acceded to. - Accordingly, the writ petition is dismissed as not maintainable. - Decided against the petitioner.

Issues Involved:
1. Challenge to the Order-in-Original demanding service tax.
2. Exhaustion of appeal remedy.
3. Pre-deposit condition for filing an appeal.
4. Reliance on previous judicial decisions.
5. Validity of the amended provisions of Section 35F of the Central Excise Act.

Detailed Analysis:

1. Challenge to the Order-in-Original demanding service tax:
The petitioner challenged an Order-in-Original dated 23.3.2016, which confirmed a demand of ? 44,20,799/- in service tax for the assessment years 2007-08 and 2011-12, along with interest and penalties under Section 73(1) of the Finance Act, 1994.

2. Exhaustion of appeal remedy:
The court questioned whether the petitioner had exhausted the appeal remedy provided under the Finance Act. The petitioner’s counsel responded by stating that the petitioner did not intend to contest the merits of the case but sought a direction to approach the Tribunal to hear the stay application without fulfilling the pre-deposit condition.

3. Pre-deposit condition for filing an appeal:
The petitioner argued for bypassing the mandatory pre-deposit condition (7.5% of the tax amount) introduced from 6.8.2014. The petitioner relied on the decision in Arafaath Travels Pvt. Ltd. Vs. CESTAT, which suggested that appeals initiated before the amendment should not be affected by the new provisions. However, the court noted that the decision in M/s. Dream Castle & another Vs. Union of India held that the amended provisions apply to all appeals filed after the amendment date, thus rejecting the petitioner’s contention.

4. Reliance on previous judicial decisions:
The petitioner cited the case of Arafaath Travels Pvt. Ltd. to support their argument. However, the court observed that this decision did not question the validity of the amended provisions. The court also referenced the decision in M/s. Dream Castle & another, which upheld the validity of the amendment and dismissed the writ petition challenging the pre-deposit requirement. The court further noted the consistent judicial opinion that the right of appeal is statutory and can be regulated by conditions imposed by the legislature.

5. Validity of the amended provisions of Section 35F of the Central Excise Act:
The court referred to the judgment in M/s. Dream Castle & another, which elaborately discussed the validity of the amended Section 35F and concluded that the requirement of a pre-deposit of 7.5% is neither unreasonable nor onerous. The court also cited the Delhi High Court’s decision in M/s. Pioneer Corporation, which emphasized that the amended Section 35F aims to limit the discretion of the Tribunal regarding pre-deposits, thus aligning with legislative intent.

Conclusion:
The court concluded that the petitioner’s request to direct the Tribunal to hear the stay application without the mandatory pre-deposit was not maintainable. The writ petition was dismissed, with the petitioner advised to file an appeal with the Tribunal if so desired. The court upheld the legal interpretation that the amended provisions apply to all appeals filed after 6.8.2014, and the pre-deposit condition is valid and enforceable.

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