Tobacco Board vs Commissioner of Cus.,C. Ex. and S.T.

G. Rohini, J.—M/s. Tobacco Board, Guntur, which is a body corporate under the control of the Government of India and established under the Tobacco Board Act, 1975 is the petitioner before us. By order dated 30-3-2012 passed by the Commissioner, Customs, Central Excise & Service Tax, Guntur, the petitioner was held liable to pay the Service Tax in respect of consideration received towards auctioneer''s services, renting of immovable property service and etc., claiming that the same forms part of gross value as defined u/s 67 of the Finance Act, 1994. The said demand was for the period from May, 2006 to September, 2010. Aggrieved by the said order, he preferred an appeal being STA No. 2145/2012 before the Central Excise & Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Bangalore, along with Application No. 1562/2012 seeking to dispense with the pre-deposit u/s 35F of the Central Excise Act, 1944 and stay of the order under appeal. The said application was dismissed by the CESTAT by order dated 11-7-2013. Hence, the present writ petition.

We have heard Sri J.V. Prasad, the learned counsel appearing for the petitioner and Sri V. Gopala Krishna Gokhale, the learned Standing Counsel for the Customs and Central Excise.

As could be seen, the Service Tax on the service of "auction of property" was introduced w.e.f. 1-5-2006. The petitioner initially claimed that it is not liable to pay Service Tax in view of the Circular dated 18-12-2006 wherein it was clarified by the Central Board of Excise and Customs (C.B.E. & C.) that no Service Tax would be leviable when sovereign/public authorities in performing statutory functions/activities provide service and collect the fee in respect thereof. However, the Government of India, Ministry of Finance, by order dated 14-8-2008 informed that the Circular dated 18-12-2006 would not be applicable to the petitioner. Against the said order the Indian Tobacco Association and others filed writ petitions and the same are pending before this Court.

It is pleaded in the writ petition that the demand of Service Tax made by Order dated 30-3-2012 for the period from May, 2006 to September, 2010 is barred by limitation. It is also pleaded that as against the total demand of Rs. 20,54,39,047/-, the petitioner has already remitted a sum of Rs. 17,08,62,387/- and thus the balance of the short payment is only Rs. 2,64,90,625/- which is yet to be collected from the buyers. Thus, it is contended that a strong prima facie case is made out and therefore the Appellate Tribunal ought to have considered the petitioner''s request for waiver of the pre-deposit.

As noticed above, the specific plea of the petitioner is that in view of the uncertainty prevailing prior to the Government of India''s order dated 14-8-2008 it could not collect the Service Tax from the growers and buyers. That apart, the question whether the petitioner is liable to pay the Service Tax or not is the subject matter of the writ petitions pending before this Court. It is also relevant to note that the petitioner has already remitted substantial part of the impugned demand. It is pleaded before us that the short payment as mentioned by the Commissioner in the order dated 30-3-2012 is incorrect and appropriate steps are being taken for rectification.

In the totality of the facts and circumstances noticed above, we find force in the submission of the learned counsel for the petitioner that the deposit of tax demanded together with the interest and penalty would cause undue hardship to the petitioner. Therefore, we are of the opinion that the interest of justice would be met if the pre-deposit of at least the penalty and interest is waived.

Accordingly, the impugned order is set aside and the writ petition is disposed of at the stage of admission with a direction that the petitioner shall deposit the entire tax component under the Order-in-Original dated 30-3-2012, after giving credit to the amounts already deposited, within eight (8) weeks from today. On such deposit, the petitioner''s appeal shall be entertained and disposed of on merits following due process of law. It is also made clear that in case the petitioner fails to deposit the tax component within the time fixed above, the impugned order dated 11-7-2013 shall stand revived.

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