Board of Trustees of Jawaharlal Nehru Port Trust vs C.C.E.

This Appeal is by the Board of Trustees of Jawaharlal Nehru Port Trust challenging an order passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai on 17-9-2013 on an application for waiver of pre-deposit of service tax of Rs. 1,64,01,668/- plus interest and penalty. In the submission of Mr. Sreedharan, learned Senior Counsel appearing for the Appellant, the Tribunal in passing the impugned order has lost sight of the fact that the record also refers to the Chart at page 198 of the paper book which contains the details of the credit availed of during April, 2010 to March, 2011. The break up would indicate that the substantial sum, namely, Rs. 8,766,774/- pertains to services not provided. In view thereof and in the teeth of clear language of sub-rule (3) of Rule 6 of the Service Tax Rules, 1994, the Tribunal has erred in directing pre-deposit of Rs. 1 crore. That is on the footing that the present Appellants have not demonstrated even prima facie as to how the ingredients of sub-rule (3) are satisfied by them. The Tribunal has virtually concluded that this sub-rule could not have been invoked because the case involves adjustment and it is not in respect of services which are not provided, but it is for the discount and rebate. Therefore, such findings give rise to a substantial question of law for which this Appeal requires admission.

We have been taken through the order passed by the Tribunal and the orders impugned before it and the stand taken by the Appellants.

Alternatively and without prejudice, it is submitted that as the Appellant is the Public Sector Undertaking, in terms of the order passed by this Court in Writ Petition No. 1477/2009 (Hindustan Petroleum Corporation Limited v. Union of India) decided on 2-9-2009 reported in 2010 (256) E.L.T. 731 (Bom.), such Public Sector Undertakings need not be called upon necessarily to deposit the sum and the interest of justice would be protected by obtaining an undertaking or bond from such Undertakings which are otherwise solvent. In these circumstances the Appeal deserves to be admitted is the submission.

On the other hand, Mr. Rao, learned counsel appearing for the Respondent, urged that this Appeal does not give rise to any substantial question of law. This is not a case where the Tribunal while passing the impugned order completely ignored the material on record or recorded any prima facie finding which is perverse or contrary to law. The discretion exercised at prima facie stage need not be interfered with and particularly in the light of the observations and findings in the order of the Commissioner. For these reasons, the Appeal deserves to be dismissed.

After having heard the learned counsel at some length and perusing with their assistance the impugned order, what we find is that the Tribunal was dealing with an application seeking to waive the condition of pre-deposit. The Tribunal was of the opinion that a prima facie case of total waiver of pre-deposit of the service tax is not made out. In doing that, the Tribunal has referred to the order of the Commissioner and which was impugned before it. The Commissioner after referring the entire material, arrived at a conclusion that the case at hand does not reveal that the present Appellants are entitled to the benefit of adjustments of excess service tax paid by taking recourse to sub-rule (3) of Rule 6 of the Service Tax Rules, 1994. The Tribunal has referred to the order of the Commissioner. The Commissioner found that the present Appellants have issued credit notes to their customers for the purpose of providing billing/accounting adjustments after allowing certain discounts and rebates and after due provision of services by them. It is only in the case of Serial Numbers 1, 4, 7 and 8, namely, volume discount, shallow berth rebate, overcharged than the contract value and wrong billing/incorrect charging of rates, that the Appellants have not provided services, but have billed their customers. The Commissioner, therefore, observed that in the majority of instances, the credit notes do not relate to non-provision of services either partly or wholly. Even in some cases where the Appellants claimed to have issued credit notes on account of not providing services to their customers, the Commissioner found the same as factually incorrect for the reason that these credit notes are admittedly issued on the ground of wrong billing, quantity billed more, to extend discounts or rebates, etc. Thus, in majority of the cases the adjustments of excess payments claimed during the relevant period would in fact not relate to the port services which were not provided to the customers.

In these circumstances that the Tribunal has recorded the prima facie findings that this is not a fit case for complete waiver. We do not find that such findings recorded by the Tribunal do not meet the requirement stipulated by law. The Tribunal at the stage at which the matter was brought before it was not required to render any final conclusion or opinion. Only limited jurisdiction that the Tribunal was exercising was whether the case was fit enough to direct the Public Sector Undertaking not to deposit any amount of the tax demanded and thus, relieve it from the condition of pre-deposit or partial deposit. In doing that the Tribunal has referred to the materials produced. It has not made any detailed inquiry and rightly so. In these circumstances the Tribunal has not proceeded on misreading or misconstruction of sub-rule (3) or in applying the Rule, has omitted from consideration any of the material. In the above circumstances we do not find any merit in the Appeal.

Even the alternate plea would not detain us. That is based on the footing that in such matters the Public Sector Undertaking need not be called upon to deposit the entire sum, but can be directed to execute a general bond towards the amount of duty. In this behalf, reliance is placed upon a Division Bench judgment of this Court in the case of Hindustan Petroleum Corporation Limited v. Union of India (supra). We have carefully perused this decision as well. We find that the Division Bench was not laying down any absolute principle, but found that in the facts brought before it, the Petitioner was the Government of India undertaking and the solvency was beyond doubt. The question raised before the Division Bench required serious consideration by the Tribunal. In that, the Division Bench rendered the judgment and concluded that there was prima facie case made out for complete waiver. It is in these circumstances the Division Bench observed that ends of justice would be met by directing the Petitioner therein to execute a general bond. Beyond that we do not see any general rule laid down and that in all such cases the condition of pre-deposit can be waived by calling upon the Public Sector Undertaking to execute a general bond. In these circumstances the decision referred does not advance the case any further. The Appeal, therefore, fails.

However, we clarify that the observations made either by the Tribunal or this Court are tentative and have been recorded only for the purpose of disposal of the application seeking waiver of condition of pre-deposit and beyond that, they shall not influence the Tribunal while deciding the Appeal finally. At the request of the learned counsel appearing for the Appellant, time to deposit a sum of Rs. 1 Crore under the impugned order is extended upto 25th March, 2014. The Appeal is, accordingly, dismissed. No costs.