High Court overturns CESTAT order on service tax pre-deposit, directs govt undertaking to pay 50%

The High Court set aside the CESTAT's order requiring a pre-deposit of Rs. 50 lakhs for a service tax demand of Rs. 63,57,940. The Court directed the petitioner, a government undertaking, to deposit 50% of the service tax amount determined in the original order by a specified date, with non-compliance leading to the revival of the original order. No costs were imposed on either party.

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Issues:
1. Service tax demand and waiver of pre-deposit.

Analysis:
The judgment pertains to a writ petition filed by a Government of India undertaking under the Ministry of Steel, registered as a service provider under the Finance Act, 1994. The petitioner was aggrieved by an Order-in-Original demanding a specific amount towards short paid service tax, education cess, interest, and penalty. The petitioner appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) seeking waiver of the pre-deposit condition imposed. The CESTAT's order directed a pre-deposit of Rs. 50 lakhs within four weeks, subject to which the balance demand would be waived pending the appeal. The petitioner challenged this order in the High Court.

Upon hearing both parties and examining the record, the High Court noted that the impugned order was passed without giving the petitioner an opportunity to be heard. Although a request for adjournment was made on behalf of the petitioner, the CESTAT, considering the appeal's age, declined to grant the adjournment. Despite the Service Tax demand being Rs. 63,57,940, the CESTAT directed a deposit of Rs. 50 lakhs for pre-deposit. The petitioner contended that it had not collected the disputed Service Tax and was facing financial constraints, leading the High Court to consider modifying the conditions of the impugned order.

Consequently, the High Court set aside the impugned order and directed the petitioner to deposit 50% of the Service Tax determined in the Order-in-Original by a specified date. Failure to comply would result in the revival of the impugned order. The judgment concluded without imposing any costs on either party.

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