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of <h1>High Court permits Bank Guarantee instead of cash pre-deposit for Customs Tribunal appeal.</h1> The High Court allowed the petition challenging the Customs, Excise and Service Tax Appellate Tribunal's order, substituting the cash pre-deposit ... Penalty – stay of pre deposit - programme producer - programme production service - Tribunal had directed the petitioner to pre-deposit Rs. 50,00,000/-, whereas the amount of penalty was imposed in the sum of Rs. 2.25 crores - Subsequently, the petitioner filed modification application praying for reduction in the quantum of pre-deposit to the extent of 10% of the penalty. - Tribunal did not accept the prayer – the petitioner had produced the programme on its own account and not on account of any other person, as such, the petitioner was erroneously brought within the net of Service tax. - the petitioner had recovered the Service tax from its clients under the erroneous belief that they are required to pay Service tax. Provisions of the Act mandate them to pay the Service tax to the Department regardless of the fact whether or not the petitioner was liable to pay Service tax in view of Section 73A of the Finance Act, 1994. As such, the petitioner was advised not to challenge its liability to pay the Service tax. That is how they paid the Service tax together with interest. - Held that: without interfering with the order, interest of justice would be served by substituting the condition of pre-deposit in cash with that of the Bank Guarantee – petitioner directed to furnishing Bank guarantee of any nationalized bank within a period of four weeks Issues:1. Challenge against the order of the Customs, Excise and Service Tax Appellate Tribunal2. Interpretation of liability under Section 65(86b) of the Finance Act, 19943. Imposition of penalty and pre-deposit requirement4. Payment of Service tax by the petitioner under erroneous belief5. Prima facie case for dispensing with the pre-deposit6. Substitution of pre-deposit condition with Bank Guarantee1. Challenge against the Tribunal's Order:The petition challenged the Customs, Excise and Service Tax Appellate Tribunal's order directing the petitioner to pre-deposit Rs. 50,00,000/- due to a penalty imposed under Section 78 of the Finance Act, 1994. The petitioner sought a reduction in the pre-deposit amount, which was initially rejected by the Tribunal.2. Interpretation of Liability under Section 65(86b):The petitioner argued that no Service tax was payable as per Section 65(86b) since the programme producer is liable to pay Service tax only if reproducing the programme on behalf of another person. The petitioner contended that they produced the programme on their own account, not on behalf of another, thus erroneously subjected to Service tax.3. Imposition of Penalty and Pre-deposit Requirement:The petitioner's counsel contended that, considering the circumstances and prima facie case made, no penalty should be imposed. The petitioner had also raised various contentions to demonstrate a case for dispensing with the pre-deposit requirement entirely.4. Payment of Service Tax under Erroneous Belief:It was argued that the petitioner had recovered Service tax from clients under the mistaken belief that they were required to pay it. Despite advice not to challenge the liability, the petitioner paid the Service tax along with interest as mandated by the Act.5. Prima Facie Case for Dispensing with Pre-deposit:The petitioner presented several contentions to support the prayer for dispensing with the pre-deposit requirement entirely, emphasizing the absence of penalty imposition based on the circumstances.6. Substitution of Pre-deposit with Bank Guarantee:After hearing both parties and considering the contentions raised, the Court decided to substitute the cash pre-deposit condition with a Bank Guarantee from a nationalized bank. The petitioner was directed to furnish the Bank Guarantee within four weeks, to be kept active until the Tribunal's appeal decision, and subject to the appeal's outcome.In conclusion, the High Court allowed the petition with the modification of the pre-deposit condition, replacing it with a Bank Guarantee, ensuring compliance with the Tribunal's order.
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