Sheeba Kuries Ltd. vs Commissioner of Central Excise

Leave to amend to correct the dates of the impugned order. Amendment to be carried out forthwith. This appeal is by the assessee. The assessee is aggrieved by the interim order passed by the Tribunal on an application for stay. By order dated 30th September, 2013 the applicant-appellant before us had applied for waiver of pre-deposit of service tax of Rs. 1,86,14,312/-, interest and penalty.

The Tribunal by the impugned order dated 30th September, 2013 has directed the appellant-applicant to deposit the remaining amount of the demand namely Rs. 36,00,000/- within 8 weeks.

Mr. Shah appearing in support of this appeal submitted that the Tribunal has passed this order relying upon the view taken by the learned single Judge of the Kerala High Court in the case of All Kerala Association of Chit Funds Vs. Union of India, . The Tribunal has noted that the appellant relied upon a Division Bench judgment of Andhra Pradesh High Court in the case of A.P. Federation of Chit Funds Vs. Union of India (UOI), .

If the point was debatable and prima facie the demand was not sustainable in the light of the view taken by the Andhra Pradesh High Court, then, relying on the learned single Judge view of the Kerala High Court, the Tribunal committed an error in directing appellant to deposit the remaining amount. Mr. Shah submits that this is nothing but dismissing the application in its totality.

Mr. Jetley appearing on behalf of the Revenue submits that the order passed is discretionary. The demand was much more and inclusive of interest and penalty. It has been scaled down by the Tribunal and it is only to secure the amount of duty demanded and interest that the said direction is issued. There is nothing arbitrary, erroneous or illegal about it. Therefore, it does not raise any substantial question of law.

We have with the assistance of Mr. Shah and Mr. Jetley, perused the order passed and impugned in this appeal. Although the matter is at prima facie stage and it is settled principle of law that an appellate Court will not interfere in the discretionary exercise only because another view is possible or that the Tribunal ought to have considered all the issues raised and on merits, but we find that at the prima facie stage, the Tribunal has failed to consider the material necessary at that stage. In other words, whether, a strong prima facie case is made out and if the point is debatable and legal one, then, the equities should have been balanced, with an appropriate direction. In these circumstances, the appeal deserves admission. It is admitted on the substantial question of law:-

"(a) Whether despite divergent views of two High Courts on the same issue, the Tribunal was right in holding that the Appellant has not made out a prima facie case and therefore directing the Appellant to deposit additional Rs. 30 lakhs to make the entire amount of assessed duty liability deposited at the Stay stage?"

With the consent of the learned counsel, we have heard the appeal finally. We are of the opinion that the argument and which was a legal one has been noted by the Tribunal. The Andhra Pradesh High Court held that even if there is a provision in the Finance Act, it will not be applied to all forms of cash management and it would not be liable to service tax. That was a case dealt with and in the context of chit funds. The Andhra Pradesh High Court''s judgment was holding the field. It was cited before the Kerala High Court but a learned single Judge of the Kerala High Court has taken a different view. To our mind, when there were two views before the Tribunal and on a legal point, then, a prima facie case was made out and for waiver of pre-deposit. More so, when the appellant has already and noted by the Tribunal, deposited a sum of Rs. 1,55,00,000/- by way of service tax and Rs. 15,00,000/- by way of interest. In such circumstances, the amount was substantially secured. In the light of the legal argument canvassed and it requiring serious consideration, this was a fit case where the demand for balance deposit could have been waived. In the light of the above discussion, the impugned order is quashed and set aside. The stay application for waiver pre-deposit preferred by the appellant is allowed. There shall be a waiver of pre-deposit of Rs. 30 lakhs till the hearing and final disposal of the appeal. However, this order and direction will not bind the Tribunal while deciding the appeal finally. The appeal shall be decided on its own merits and in accordance with law.

1Paragraph number as per certified copy.