Sri Chaitanya Educational Committee vs C.C., C. EX. and S.T., Guntur

G. Rohini, J.—The petitioner which is a society registered under the provisions of the Registration of Societies Act, 1860, has been operating educational institutions and imparting education through Junior Colleges and Coaching centers. By notice dated 8-9-2008 issued by the Department of Commercial Taxes, the petitioner was called upon to show cause as to why Service Tax should not be collected as provided under the provisions of the Finance Act, 1994 on the income received by the petitioner for the period 1-4-2003 to 31-3-2007 under the head of "Commercial Training or Coaching Services". After considering the petitioner''s explanation, the respondent herein - the Commissioner of Customs, Central Excise and Service Tax, Guntur passed the Order-in-Original dated 11-6-2009 confirming the demand made in the show cause notice. Aggrieved by the same, the petitioner preferred an appeal before the CESTAT, Bangalore. The said Appeal No. 301 of 2010 was admitted and unconditional stay of pre-deposit was granted by the CESTAT. Challenging the order of the CESTAT, the Department filed a writ petition and this Court disposed of the said writ petition remanding the matter back to the CESTAT to consider the balance of convenience and financial hardship while disposing the stay application The Commissioner of Central Excise Vs. Sri Chaitanya Educational Committee, ]. In pursuance thereof, the CESTAT passed a fresh order dated 18-4-2011 2011 (23) S.T.R. 481 (Tri.-Bang.)] maintaining the full waiver of pre-deposit granted to the petitioner and staying the recovery till the disposal of the appeal. The said order was again questioned by the Department before this Court by filing a writ petition. By order dated 19-10-2011 Commissioner of Central Excise Vs. Sri Chaitanya Educational, ] this Court set aside the order of the CESTAT and directed that the petitioner should deposit 1/3rd of the total demand of Service Tax, cess and penalties to the tune of about Rs. 80 Crores. The petitioner carried the matter to the Supreme Court by filing a SLP and the same was disposed of restricting the 1/3rd pre-deposit only to the Service Tax without including the cess and penalties [ 2012 (25) E.L.T. 513 (S.C.)]. In compliance with the said order, the petitioner is stated to have deposited about Rs. 29 Crores.

While the matters stood thus, separate show cause notices were issued to the petitioner demanding Service Tax for the subsequent years i.e., 2007-08, 2008-09 and 2009-10. Though the petitioner submitted detailed explanations disputing its liability, the contentions of the petitioner were not accepted and the respondent passed the Order-in-Original dated 30-3-2012 confirming the demand of Rs. 63,06,14,433/- for the period 2007-08 to 2009-10. Aggrieved by the said order, the petitioner filed an appeal before the CESTAT along with an application for stay.

Again for the year 2010-11 the petitioner was called upon to pay the Service Tax together with interest and penalty by notice dated 18-10-2011 followed by the Order-in-Original dated 13-7-2012 whereunder the Service Tax liability was determined as Rs. 13,04,69,118/-. Against the said order, the petitioner preferred an appeal before the CESTAT along with an application for stay and waiver of pre-deposit.

The applications for stay filed by the petitioner in the two appeals preferred against the Orders-in-Original dated 30-3-2012 and 13-7-2012 were heard together by the CESTAT and by order dated 5-4-2013 the petitioner was directed to pre-deposit a sum of Rs. 25 Crores within eight weeks subject to which there would be waiver and stay in respect of the balance tax including penalties and interest on Service Tax and Education Cesses.

The petitioner filed Miscellaneous Application No. 27138 of 2013 seeking modification of the order dated 5-4-2013 and to grant unconditional stay. The said application was disposed of by the CESTAT by order dated 15-7-2013 holding that no case was made out for modification. However, the petitioner was granted further time of eight weeks for making the pre-deposit as directed in the order dated 5-4-2013.

The said order of the CESTAT, dated 15-7-2013 is assailed in the present writ petition contending inter alia that in view of the Circular dated 20-6-2003 issued by the Central Board of Excise & Customs clarifying that the institutes like colleges which apart from imparting education for obtaining recognized degrees also impart training for competitive examinations and etc., cannot be regarded as "Commercial training or Coaching institutes", a strong prima facie case is made out to show that the service provided by the petitioner is not taxable, and therefore it is a fit case for granting full waiver of pre-deposit.

Reiterating the said contention, it is further submitted by Sri S. Ravi, the learned Senior Counsel appearing for the petitioner that as the petitioner has already paid about Rs. 89 Lakhs towards the Service Tax levied for the year 2010-11 on the fee collected from non-intermediate students and moreover security of properties worth about Rs. 50 Crores has also been furnished, the interest of the Revenue is secured and therefore the conditional order is not warranted. The further submission of the learned Senior Counsel is that the appeal preferred by the petitioner against the Order-in-Original, dated 11-6-2009 in which the very same issues are involved has already been slated for hearing on 28-10-2013, it would be appropriate to hear these two appeals also on 28-10-2013 and grant unconditional stay in the meanwhile.

The submission of the learned Senior Counsel has been opposed by Sri V. Gopala Krishna Gokhale, the learned Standing Counsel for the Customs & Central Excise contending that the pre-deposit of duty demanded being a mandatory statutory condition, there cannot be full waiver and therefore the CESTAT is justified in declining to modify the conditional order passed earlier.

Having given our thoughtful consideration to the rival submissions made by the learned counsel, we do not find any justifiable reason to hold that the impugned order suffered from any error of fact or law warranting interference by this Court.

As per the first proviso to Section 35F of the Central Excise Act, pre-deposit of the duty demanded or penalty levied can be waived where the Appellate Tribunal is of the opinion that such deposit would cause undue hardship to the applicant. As we could see, the Order dated 5-4-2013 came to be passed taking into consideration all the relevant factors including the orders passed by this Court and the Apex Court in respect of the earlier demand made for the period 2003-2007 and the payments that were already made by the petitioner. Thus adopting a reasonable approach, the pre-deposit was restricted to Rs. 25 Crores which in fact is less than 1/3rd of the total demand of Service Tax and Education Cess. The petitioner''s request for modification of the said order was rejected assigning valid reasons therefor.

On a perusal of the Order, dated 5-4-2003 and the impugned order dated 15-7-2013, we are of the opinion that the condition of pre-deposit of Rs. 25 Crores was imposed on proper exercise of the discretion vested in the Appellate Tribunal and on proper appreciation of the facts and circumstances of the case. Therefore, the impugned order which cannot be treated either arbitrary or irrational, warrants no interference by us on any ground whatsoever.

However, we deem it appropriate to permit the petitioner to remit the pre-deposit amount of Rs. 25 Crores in two installments, the first installment of Rs. 15 Crores payable on or before 4-10-2013 and the balance of Rs. 10 Crores on or before 4-11-2013.

Writ Petition is accordingly disposed of. No costs. Consequently, the miscellaneous petitions, if any, pending in the writ petition shall stand closed.