2017 (7) TMI 564 - HC - Service Tax

High Court grants stay on excessive deposit, expedites appeal hearing, and sets aside Tribunal's order

Titan Industries Limited (Watch Division) Versus Commissioner of Service Tax, Customs, Excise & Service Tax Appellate Tribunal

The Madras High Court admitted the appeal challenging the Customs, Excise and Service Tax Appellate Tribunal's order requiring the Appellant/Assessee to ... Pre-deposit - Section 35F(iii) of the 1944 Act - Held that: - the measure given for preferring an appeal under Section 35F(iii), post amendment on 06.08.2014, would be 7.5% of the duty demanded or penalty imposed or both - even if, that measure is applied, the Appellant/Assessee has paid more than the amount prescribed under Section 35F(iii) of the 1944 Act - interim order granted by this Court on 18.06.2014 shall continue to operate till the adjudication of the appeal by the Tribunal - appeal allowed. Issues:1. Challenge against the order of the Customs, Excise and Service Tax Appellate Tribunal.2. Deposit of a specific amount by the Appellant/Assessee as a condition of stay.3. Compliance with the deposit condition by the Appellant/Assessee.4. Interpretation of Section 35F(iii) of the Central Excise Act, 1944.5. Calculation of the amount paid by the Appellant/Assessee in relation to the total tax demand.6. Duration of the appeal adjudication process.7. Decision on setting aside the Tribunal's order and directing expedited appeal hearing.Analysis:The appeal before the Madras High Court challenged the order of the Customs, Excise and Service Tax Appellate Tribunal, which directed the Appellant/Assessee to deposit Rs. 8.00 crores as a condition of stay pending appeal adjudication. The High Court admitted the appeal and framed four questions of law, granting interim stay against the Tribunal's order upon the deposit of Rs. 2 crores within two weeks. The Appellant/Assessee complied by depositing the required amount.The Respondent/Revenue did not dispute the Rs. 2 crores deposit and acknowledged that the case pertained to a period before an amendment in Section 35F(iii) of the Central Excise Act, 1944, which now mandates a pre-deposit equivalent to 7.5% of the duty demanded or penalty imposed. The total tax demand on the Appellant/Assessee was Rs. 20,16,92,541. Despite the amended provision, the Appellant/Assessee had paid more than the required amount.Considering the circumstances, including the lengthy appeal adjudication delay of almost three years, the High Court decided to set aside the Tribunal's order and instructed the Tribunal to expedite the appeal hearing. The interim stay granted by the High Court was to remain in effect until the Tribunal's adjudication. Consequently, the questions of law framed did not need to be answered, and the appeal was disposed of without costs.