Quantum of amount to be pre deposited as a pre-condition of hearing the appeal

PJ/CASE LAW/2016-17/3201

Case-RAJ FURNITURES Versus COMMISSIONER OF SERVICE TAX, DELHI

Citation-2016 (43) S.T.R. 85 (Del.)

Brief Facts-This appeal is directed against an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), dated 26-8-2014 in Service Tax Stay Applications 5179/2012 & ST/S/58880 of 2013, Service Tax Appeal No. 4075 of 2012 and 58235/2013. It is urged that the direction to deposit Rs. 60 lakhs with proportionate interest as a pre-condition for hearing the appeal gravely prejudices the appellant.

Appelants Contention-The appellant is a service provider in construction contracts. It is contended that in respect of the contracts in question for the period April, 2007 to March, 2009, only 20% of the value of the construction contracts denoted the service components. The appellant’s contention was that the amounts deposited by it were in excess of this proportion and rather amounted to almost 33% of the total value of the contract and consequently it could not be assessed to service tax. The appellant relied upon the decision in G.D. Builders v. Union of India & Anr., 2013 (32)S.T.R.673 (Del.) while dealing with the Notification No. 1/2006-S.T., dated 1-3-2006.

Respondents Contention-The respondent, on the other hand, had contended that the claim had not been made in terms of the mandate under Notification No. 12/2003-ST and consequently there was justification in its action to recover the amounts.

Reasoning Of Judgement-The assessee’s appeal against the order of the adjudicating officer pursuant to the show cause notice resulted in the impugned order directing deposit of Rs. 60 lakhs. Having considered the entire circumstances, this Court is of the opinion that prima facie the appellant’s submission that 20% of the gross receipts of the work orders relates to service components, is the subject matter of the merits of the appeal. In these circumstances, the direction to deposit Rs. 60 lakhs, based on the adjudication order that abatement of 67% of the amount under the Notification No. 1/2006-S.T. was not available, itself requires to be gone into. In these circumstances, the direction to pay Rs. 60 lakhs with proportionate interest is hereby modified; instead, the appellant shall deposit Rs. 20 lakhs as a pre-condition for hearing of its appeal. The said amounts shall be paid within six weeks from today. The question of law is answered in the above terms. The appeal is accordingly partly allowed.

Decision-Appeal allowed

Comment-The gist of the case is that in the given case tribunal directed the pre-deposit of 60 lakhs as a pre condition of hearing the appeal in respect of construction services. But as the service component in entire contract is about 20% of gross receipts and issue of eligibility of abatement under Notification No. 1/2006-S.T. is contestable, the amount of pre-deposit has been reduced to 20 lakhs and the same is to be paid within six weeks according to Section 83 of Finance Act, 1994. Hence the appeal is partly allowed.

Prepared By-Neelam Jain

Comments

PJ/CASE LAW/2016-17/3201

Post a Comment

Query