2011 (2) TMI 88 - HC - Service Tax

Tribunal Upheld on Pre-Deposit Waiver for Works Contracts: Company Petition Dismissed

The High Court upheld the Tribunal's decision regarding the waiver of pre-deposit and stay of recovery, dismissing the writ petition. The petitioner, a ... Works contract – stay – amendment w.e.f. 1.6.2007 – Existing contracts - On-going Works Contract as on 01.06.2007 - Prima facie case alone is not sufficient for granting stay - Tribunal to follow principles for granting stay - Principles laid down in an , the order of tribunal dated 29.11.2010 does not suffer from any error much less grave error apparent on the face of the record. We are not, therefore, inclined to interfere with the well considered order of the learned CESTAT . We, however, request that in case the petitioner complies with the impugned order dated 29.11.2010, in Appeal No.ST /440/2010 and ST/269/2010 passed by the learned CESTAT , within three weeks from today, the appeal itself be disposed of by the CESTAT within a period of three months thereafter. Issues:1. Eligibility of a company for availing benefits under the Works Contracts Composition Scheme.2. Proper exercise of power by the Tribunal under Section 35F of the Act.3. Consideration of undue hardship for waiver of pre-deposit.4. Interpretation of relevant case law and principles for granting stay or waiver of pre-deposit under Section 35F of the Act.Analysis:Issue 1:The petitioner, a company registered under the Indian Companies Act, 1956, sought the benefit of the Works Contracts Composition Scheme but faced a show cause notice challenging their eligibility. The Tribunal granted partial relief by allowing abatement from the taxable value of works contracts. However, the Tribunal held that the petitioner was not entitled to opt for composition under the Scheme for contracts entered into before a specified date. The Tribunal's decision was based on the interpretation of relevant case law and the specific provisions of the Scheme, leading to a partial waiver of pre-deposit.Issue 2:The petitioner challenged the Tribunal's order, alleging improper exercise of power under Section 35F of the Act. The petitioner argued that the Tribunal did not consider the prima facie case and that the order was vitiated. The petitioner relied on case law to support the claim of undue hardship due to financial implications of pre-deposit requirements. The Tribunal's decision was defended by the Senior Counsel for Central Excise and Customs, emphasizing the need to safeguard the interests of the Revenue while considering waivers of pre-deposit.Issue 3:The Tribunal's order was analyzed in light of the principles outlined in relevant case law, emphasizing the importance of not disposing of stay applications routinely and considering factors like prima facie case, balance of convenience, and undue hardship. The Tribunal's discretion to grant full or partial stay was subject to imposing necessary conditions to protect the Revenue's interests. The judgment concluded that the Tribunal's decision did not exhibit any grave error warranting interference, and the order was upheld.In conclusion, the High Court dismissed the writ petition, upholding the Tribunal's decision regarding the waiver of pre-deposit and stay of recovery. The Court directed the petitioner to comply with the Tribunal's order within a specified timeline for the appeal to be disposed of accordingly.