Utpal Roy vs Commissioner of Central Excise

Harish Tandon, J.—The petitioner assailed the order dated December 5, 2013 passed by the Customs, Excise and Service Tax Appellate Tribunal, East Regional Bench, Kolkata in SP No. 1262 of 2011 whereby and whereunder the application for stay of the demand was disposed of. The authority concerned issued a show cause notice contemplating to recover the Service Tax amounting to Rs. 49,21,367/-. The reply given to the said show cause notice was considered and the demand was reduced to Rs. 44,56,586/-. The authority found that there was a discrepancy between the gross taxable value shown in the ST-3 return and the receipt shown in the balance-sheet.

According to the petitioner, certain transactions, which does not attract the liability towards the Service Tax, were not taken note of by the authorities and the imposition of the demand is illegal and outcome of non-application of mind.

The petitioner challenged the order imposing the demand before the appellate authority wherein an application for stay is taken out. The appellate authority after considering the submissions so advanced directed the deposit of 50% of the demand as a condition for granting the stay. Because of the noncompliance of the conditions imposed for granting the stay, the appeal before the appellate authority stood dismissed. Assailing the order, the petitioner approached the CESTAT and further took out an application for stay of the demand which came to be disposed of by the impugned order.

The Tribunal found that an arguable case has been made out and directed the petitioner to deposit 25% of the demand and waived the remaining till the disposal of the appeal.

According to the learned Advocate of the petitioner, once a prima facie case has been made out, the Tribunal ought to have granted the total waiver of the pre-deposit condition. He further submits that the Tribunal did not take note of the financial conditions, which is one of the facets for granting the waiver. The Tribunal records that the adjudicating authority took into consideration the benefit claimed by the assessee and the purchasers in relation to the work order and extended the benefit to the petitioner. It is further recorded that the work order, which is relatable to the Service Tax, was not produced by the petitioner. The Tribunal found that an arguable case has been made out and granted the waiver to the extent of 75%, which cannot be said to be unreasonable, unrealistic and unjustified. So far as the financial stringency are concerned the Tribunal does not found that imposition of the condition for payment of 25% of the demand would cause undue hardship.

Since the Tribunal has exercised discretion in waiving 75% of the demand, this Court does not find any ground warranting interference with such discretionary order. However, considering the consequences for non-compliance of the conditions imposed in the impugned order, this Court extends the time for deposit of 25% of the duty imposed upon the petitioner till four weeks from date.

In default of the deposit as indicated above, the Tribunal shall be free to decide the matter in accordance with law. Until then the respondents are restrained from taking any steps for realization of the duty so imposed. With these observations, the writ-petition is disposed of. No order as to costs.