Waiver of Pre-deposit - Whether Tribunal can take different views than taken on previous cases of assessee?

PJ/Case Laws/2011-12/1215

Case:- Sayaji Hotels Ltd. vs. Union of India

Citation: - 2011(268) E.L.T. 315 (M.P.)

Issue: - Whether different views can be taken by the Tribunal in deciding petitioner’s prayer for the waiver of pre deposit of service tax as considered in previous occasions for same question where no change in circumstances has taken place?

Brief fact:-Petitioner claimed to be a company engaged in the business of running Hotel in Indore, which provides various services to its guest including rooms, restaurant, health club, swimming pools, taxi services, banquet hall etc. For the service related to the banquet hall which Petitioner provides for its guests, it is registered as ‘Mandap keeper’. Petitioner provides food and beverages during the function organized in the banquet hall and for the supply of the foods and beverages it was paying Sales Tax (VAT) as was applicable. From March 2005 the petitioner was paying service tax on the gross amount charged from the guest under the ‘Mandap keeper service’ excluding the value of foods and beverages sold by it in terms of Notification No. 12/2003-ST, dated 20-6-2003. Thus, petitioner claims that it was collecting and paying service tax on the full amount of service charges, tent house charges, decoration charges, stage charges on the amount charged from the guest. Petitioner’s return under Form ST-3 regarding payment of service tax were considered by the fourth respondent Commissioner Central Excise.

The Commissioner observing that the petitioner had provided service of ‘Mandap Keeper’ with catering but has not paid service tax on gross amount received after claiming abatement as per Notification No. 1/2006-ST, dated 1-3-2006, issued show cause notice to the Petitioner to deny benefit of notification dated 20-6-2003 and demanded service tax with interest and proposed to impose penalty under Section 76 and 78 of the Finance Act.                  .

The petitioner submitted its reply that they were entitled for the benefit of the Notification No 12/2003 dated 20-6-2003 and that the supply of foods and beverages in the banquet hall which is liable to sales tax (VAT) cannot be subjected to Service Tax.

The Commissioner held that the Petitioner is not entitled to get the benefit of the said Notification dated 20-6-2003. Accordingly, the fourth respondent demanded Service Tax from the petitioner with interest at the rate applicable and also imposed penalty.

Aggrieved Petitioner filed statutory appeal under Section 35F of the Central Excise Act, 1944 along with an application for stay before the Tribunal. The Tribunal rejected the Petitioner’s   prayer for the total waiver of pre-deposit and directed the Petitioner to deposit Rs 60,00,000/- out of the total demand within four weeks. Aggrieved the petitioner has filed Writ- petition before the High Court.

Petitioner contention:-The contention of the petitioner is that the Tribunal has committed error in not maintaining consistency and uniformity in approach in deciding the petitioner’s prayer for waiver. He pointed out that on the earlier two occasions in the case of the petitioner itself relating to the earlier assessment year involving identical question, the Tribunal had granted total waiver for entertaining its appeals. In the circumstances, in view of the law laid down by the Supreme Court in the case of Vishnu Traders Vs State of Haryana and others -1995 Supp(1) SCC 461 and in the view of the judgment passed by the Division Bench of Bombay High Court in the case of Wardha Coal Transport Pvt. Ltd v. Union of India , 2009 (13) S.T.R 490. (Bom), the Tribunal should have taken a consistent view and should have granted total waiver. It was further submitted that there were no changes in the circumstances after passing earlier two order of complete waiver and therefore, the petitioner should have been granted dispensation with such deposit in order to maintain the parity. In order to support his contention that the petitioner would suffer a undue hardship and that it has prima facie case as the demand raised has not leg to stand reliance was placed on judgment of the Supreme Court in case of Imagic Creative Pvt.Ltd v. Commissioner of Commercial Taxes, 2008(9) S.T.R. 337 (S.C).

Respondent contention:- Revenue argued that in the absence of undue hardship being established by the petitioner, the order passed by the Tribunal cannot be said to be illegal warranting interference by this Court in this petition under Article 226/227 of the constitution of India.

Reasoning of Judgment: - It was found on the earlier two occasions when the said two appeals were filled by the petitioner raising the identical question, the Tribunal after considering the prayer for the waiver has granted the total waiver of the deposit. However in the present case while considering the prayer of the Tribunal of the impugned order, it has observed that the appellant has come before the Tribunal for the third time to seek waiver of pre-deposit on the same plea that no service tax will be levied if Sales Tax or VAT has paid.

On going through the entire order it was found that there is no finding recorded by Tribunal that after obtaining the said order of complete waiver, the petitioner is delaying the hearing of the said appeal. In the circumstances, if the earlier appeal filed are not being heard by the Tribunal and the petitioner has been required to file an appeal for the subsequent years, petitioner cannot be made responsible and cannot be denied the similar benefit which were earlier granted to it in the earlier two appeals involving same question.

In the absence of change in the circumstances, the Tribunal should have maintained the consistency and uniformity while exercising the judicial discretion and should not have taken different view than the view it had already taken in the earlier two appeals involving identical issue that too by assigning the reason that the earlier two appeal are pending since last two and half year.

The High Court found that the course adopted by the Tribunal is contrary to the law laid down in the case of Vishnu Traders vs. State of Haryana and others in which the Supreme Court has observed that “In the matter of interlocutory order, principle of binding precedent cannot be said to apply. However the need for the consistency of approach and uniformity in the exercise of judicial discretion respecting similar causes and the desirability to eliminate occasion for the grievances of discriminatory treatment require that all similar matter should receive similar treatment except where factual differences require a different treatment so that there is assurance of consistency, uniformity, predictability and certainty of judicial approach.” The Tribunal has committed gross illegality in not maintaining uniformity and consistency in the exercise of its judicial discretion. The reason assigned by the Tribunal for not granting complete waiver in the appeal filled by the petitioner in the third year’s challenges the assessment being wholly unsustainable, the Impugned order deserve to be and is hereby quashed to the extent of the imposition of the condition of pre-deposit of Rs 60,00,000/-. The Tribunal is directed to decide the petitioner’s appeal on merits without insisting on pre-deposit. Petitioner was willing and ready to get it all the aforesaid three appeal decided as expeditiously as possible. In order to avoid undue delay the Tribunal was directed to decide all the aforesaid appeals of the petitioner finally within a period of 8 week from the date of receipt of copy of this order.

Decision: - Petition disposed of.

Comments: - As per decision of Supreme Court as referred above the Tribunal should not take different views in the absence of change in the circumstances. There should be consistency and uniformity while exercising judicial discretion by Tribunal except where factual differences require a different treatment to assure consistency, uniformity and certainty in judicial approach.

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PJ/Case Laws/2011-12/1215

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