2017 (5) TMI 401 - HC - Service Tax

Dismissal of Writ Petition Challenging Deposit Requirement for Appealing Under Finance Act, 1994

The Court dismissed the writ petition challenging an order-in-original demanding a significant amount from the Security Guards Board for Mumbai and Thane ... Pre-deposit - maintainability of appeal - Levy of service tax - Board was constituted in order to regulate the employment of private security guards employed in factories and establishments in Mumbai and Thane districts and to make better provision for their terms and conditions of employment - SCN alleges that the Board renders services. The services are referable to a statute, namely, the Finance Act, 1994. It is on this premise that the tax was sought to be imposed - Held that: - The Central Excise Act, 1944 has been amended by the Finance Act, 2015. The remedy of appeal against the order-inoriginal is available by section 35-B, namely Appeal to the Appellate Tribunal. By a further provision and incorporated in the statute, namely, section 35-F, the Tribunal or the Commissioner (Appeals), as the case may be, are mandated not to entertain any appeal. There is no financial hardship of such nature to hold that the statute imposes a excessive or onerous condition so as to avail of the right of appeal. Pertinently, neither the provisions are challenged nor the stipulation as aforesaid. The writ petition is filed only on the ground that it is not possible for the Board to arrange for the predeposit. This is not enough to entertain this petition. Petition dismissed - decided against petitioner. Issues:Challenge to an order-in-original passed by the Commissioner of Service Tax, Mumbai VII regarding a demand raised on a Security Guards Board for Mumbai and Thane District under the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981, and the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Scheme, 2002. The petitioners seek to quash the order and challenge the requirement of depositing 7.5% of the service tax confirmed for appealing under the Central Excise Act, 1944.Analysis:1. The petitioners challenged an order-in-original issued by the Commissioner of Service Tax, Mumbai VII, demanding a significant amount from the Security Guards Board for Mumbai and Thane District. The demand was based on the services provided by the Board under the Finance Act, 1994. The petitioners argued against the requirement of depositing 7.5% of the confirmed service tax for appealing under the Central Excise Act, 1944.2. The petitioners contended that the imposition of a pre-deposit condition for appealing was arbitrary and excessive, especially considering the nature of the Board's functions as a statutory authority. They referred to judgments of the Supreme Court of India to support their argument against this condition.3. The Court noted the provisions of the Central Excise Act, 1944, as amended by the Finance Act, 2015, which mandated the deposit of a certain percentage of the duty demanded or penalty imposed before filing an appeal. The Court highlighted that the purpose of this requirement was to curtail litigation and ensure that appeals are adjudicated promptly without unnecessary delays caused by interim/stay applications.4. The Court rejected the petitioners' argument that the Board faced financial hardship in arranging the required deposit, emphasizing that the Board was established by statute and had mechanisms to generate funds, including approaching the State Government for financial assistance. The Court found no excessive or onerous condition imposed by the statute for availing the right of appeal.5. Ultimately, the Court dismissed the writ petition, stating that an alternative and efficacious remedy existed under the amended Central Excise Act, 1944, where all issues of fact and law could be considered. The Court granted the petitioners six weeks to comply with the statutory pre-condition for appealing, with a warning of statutory consequences for non-compliance.6. The Court's decision was based on the availability of a legal remedy under the amended Central Excise Act, 1944, and the lack of financial hardship justifying the petitioners' challenge to the pre-deposit requirement. The Court emphasized the need to follow statutory procedures and granted a limited extension for compliance before considering the appeal on its merits.