2016 (8) TMI 1262 - HC - Service Tax

High Court upholds Rs. 50 lakh pre-deposit for tax appeal before CESTAT, stresses lack of financial hardship

NBCC Ltd. Versus Commr. of Service Tax, Delhi

The High Court upheld the order requiring a pre-deposit of Rs. 50 lakhs as a condition for hearing the appeal before CESTAT, emphasizing the lack of ... Waiver of Pre-deposit - Held that: - the appellant is a Central PSU and would not evade duty, if ultimately found warranted - The CESTAT granted substantial relief; only a small amount was directed to be deposited. No financial hardship has been shown warranting interference with the impugned order - appeal dismissed. Issues:1. Pre-deposit requirement under Section 35G of the Central Excise Act for hearing an appeal before CESTAT.Analysis:The judgment pertains to an appeal challenging an order directing a pre-deposit of Rs. 50 lakhs within six weeks as a condition for hearing the appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) under Section 35G of the Central Excise Act, read with Section 83 of the Finance Act. The appellant had received show cause notices leading to an adjudication order determining various tax liabilities, including service tax, Cenvat credit demand, interest, and penalties. The appellant approached CESTAT seeking exemption from the pre-deposit requirement, but CESTAT ordered a pre-deposit of Rs. 50 lakhs, citing statutory provisions. The appellant contended that being a Central PSU, it should have been granted full waiver due to no intention to evade duty if found liable. However, the court found no financial hardship shown to warrant interference with the impugned order, upholding the pre-deposit condition.The key contention revolved around whether the appellant, being a Central PSU, should have been granted full waiver from the pre-deposit requirement imposed by CESTAT. The court noted that while the appellant argued against the pre-deposit order on the grounds of being a Central PSU unlikely to evade duty if liable, the CESTAT had already granted substantial relief by requiring only a small amount to be deposited. The court concluded that there was no demonstrated financial hardship justifying interference with the CESTAT's order, leading to the dismissal of the appeal.In conclusion, the High Court upheld the order requiring a pre-deposit of Rs. 50 lakhs as a condition for hearing the appeal before CESTAT, emphasizing the lack of financial hardship shown by the appellant to warrant a full waiver. The judgment highlights the statutory provisions governing pre-deposit requirements for tax appeals and the court's discretion in assessing the need for such deposits based on the circumstances of the case, even when the appellant is a Central PSU.