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of <h1>Court exempts petitioner from 7.5% pre-deposit for appeal, upholds right to appeal under amended law</h1> <h3>Fifth Avenue Sourcing (P) Ltd. Versus Commissioner of Service Tax</h3> The court ruled in favor of the petitioner, holding that they are not required to make a pre-deposit of 7.5% for filing an appeal under the amended ... Waiver of pre deposit - Mandatory pre deposit of 7.5% - Provision of section 35F, whether prospective or retrospective - date of SCN 05.06.2013 - Date of OIO 27.02.2015 - amendment has come into effect from 06.08.2014 - Held that:- the assessee's right to file an appeal and a further appeal under the earlier Act is a vested right and such a right becomes vested in the assessee, the moment he filed his return which commenced the assessment proceedings. - Decision in the case of The Deputy Commercial Tax Officer Versus Cameo Exports [2005 (12) TMI 528 - MADRAS HIGH COURT] followed. As the amended provisions of the Act are not given retrospective effect as of from an anterior date, it has been construed that the amended provisions are prospective. - petitioner to file an Appeal before the CESTAT along with stay application, without making pre-deposit of 7.5% of the tax amount confirmed against the petitioner, within a period of two weeks - Decide din favour of assessee. Issues Involved:1. Liability of service tax on receipt of Letter of Credit Margin/Trade margin in convertible foreign exchange under 'Business Auxiliary Services'.2. Jurisdiction and validity of the Order-in-Original.3. Requirement of pre-deposit for filing an appeal as per amended Section 35(F) of the Finance Act, 2014.Issue-wise Detailed Analysis:1. Liability of Service Tax:The petitioner, engaged in sourcing Indian garments for foreign buyers, registered under 'Business Auxiliary Service,' received orders from overseas buyers and placed orders with Indian vendors. The petitioner retained a margin from the Letter of Credit (LC) and received payments in convertible foreign currency. The issue was whether the receipt of LC Margin/Trade margin in convertible foreign exchange for services rendered to overseas buyers is liable to service tax under Section 65(19) of the Finance Act. The petitioner argued against the service tax demand of Rs. 1,74,04,550/- for the period October 2011 to September 2012, citing a detailed reply and personal hearing before the impugned Order-in-Original was passed.2. Jurisdiction and Validity of Order-in-Original:The petitioner contended that the Order-in-Original was non-speaking and beyond the jurisdiction as it exceeded the scope of the show cause notice. Despite merits in their case, the petitioner expressed willingness to approach the appellate authority but highlighted the need for clarity on pre-deposit requirements due to amendments in Section 35(F) of the Act.3. Requirement of Pre-deposit:The petitioner referenced judgments from the Kerala and Andhra Pradesh High Courts, which concluded that appellants are not required to make a pre-deposit of 7.5% pursuant to the 2014 Amendment when the lis commenced before the amendment. The respondent opposed, arguing that the second proviso to Section 35(F) mandates pre-deposit for appeals filed after the amendment. The court examined Section 35(F), noting that the second proviso exempts appeals and stay applications pending before the amendment's commencement.Judgment:The court, aligning with the Kerala and Andhra Pradesh High Courts, held that the petitioner, whose proceedings began before the 2014 amendment, is not required to make a pre-deposit of 7.5% for filing an appeal. The court cited several precedents, including *Muthoot Finance Ltd. vs. Union of India* and *Secretary to Government, Department of Agriculture, Government of Kerala vs. Union of India*, which supported the petitioner's stance. The court emphasized that the right to appeal is governed by the law at the initiation of proceedings, not by subsequent amendments.Conclusion:The court directed the petitioner to file an appeal before the CESTAT along with a stay application without making the pre-deposit of 7.5% of the confirmed tax amount within two weeks from the order's receipt. The writ petition was disposed of, and no costs were awarded. The court's decision ensured that the petitioner could pursue their appeal under the provisions existing before the 2014 amendment, maintaining the legal principle that amendments are prospective unless explicitly stated otherwise.
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