2008 (10) TMI 45 - HC - Service Tax

High Court Bombay Reduces Bank Guarantee for Petitioner Appeal

The High Court Bombay modified an order, reducing the bank guarantee required for the petitioner to appeal a service tax liability decision. The Tribunal ... Service tax liability - pre-deposit requirement - bank guarantee - hearing and disposal on merits within fixed time - prima facie view pursuant to Bharat Sanchar Nigam Ltd. v. Union of IndiaPre-deposit requirement - bank guarantee - hearing and disposal on merits within fixed time - Modification of impugned order to permit conditional relief by acceptance of bank guarantee and direction for expeditious adjudication of the appeal. - HELD THAT: - The Tribunal had refused to dispense with the entire pre-deposit but recorded that cost of raw materials, packing materials, overheads and profit should not have been taken into account for levying service tax. The High Court observed a prima facie view, in the light of the decision in Bharat Sanchar Nigam Ltd., that the petitioner may not be liable to pay service tax. The petitioner agreed to furnish a bank guarantee of Rs.50 lakhs. In the exercise of its supervisory jurisdiction the Court modified the impugned order to require the petitioner to furnish a bank guarantee of Rs.50 lakhs from a nationalised bank to the satisfaction of the Commissioner; directed the Tribunal to hear and dispose of the petitioner's appeal on merits as expeditiously as possible and in any event within six months from service of the writ; and directed the Tribunal to make an appropriate order in relation to the bank guarantee when disposing the appeal. [Paras 2, 3]Impugned order modified to permit stay subject to furnishing of a bank guarantee of Rs.50 lakhs and to direct the Tribunal to decide the appeal on merits within six months; Tribunal to make appropriate orders regarding the bank guarantee; rule made absolute; no order as to costs.Final Conclusion: The High Court granted conditional relief by substituting a requirement of a bank guarantee for the pre-deposit, directed the Tribunal to decide the appeal on merits within six months and left the question of the bank guarantee to be dealt with by the Tribunal when disposing the appeal; rule made absolute and no costs ordered. The High Court Bombay modified an order requiring a petitioner to submit a bank guarantee of Rs.50 lakhs to appeal a service tax liability decision, based on a Supreme Court judgment indicating the petitioner may not be liable for the tax. The Tribunal must hear and dispose of the appeal within six months of the order.