AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 203
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....aid MNC (HP) and hand over the same to the other company viz., Redington India on the instructions of HP. It is the obligation of Redington India to undertake the warranty/after sales service by utilising the components sold by the appellant to HP. For rendering the services provided by the appellant to HP, they were paid an agreed amount for every sale of computer, which covered their service charges. 3. It is the case of the Revenue that the operations performed by the appellant on behalf of their buyer viz., HP are liable to be classified under sub-clause (iv) of Clause (19) of Section 65 of the Finance Act 1994 under the category of procurement of goods or service on behalf of the client under Business Auxiliary Service and the charges so collected are liable to service tax. 4. Accordingly, the Revenue issued two show cause notices dated 23.4.2008 and 20.3.2009 to the appellant demanding an amount of Rs. 2,03,97,252/- and 50,47,451/- respectively towards the service tax, Education Cess etc., for two different periods. The appellant filed a detailed reply and denied their liability. Consequently, the respondents herein passed the Order-in-original No. 59/2009 dated 22.10.2009 ....
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.... while exercising its power to dispense with predeposit under Section 35F of the Central excise Act suffers from non-consideration of relevant aspect/statutory condition stands vitiated and the Tribunal ought to have seen that any condition directing pre-deposit would cause "Undue hardship" inasmuch the petitioner has not collected any service tax on the bonafide belief that the levy of service tax is impermissible ? 5. Whether the order of the Tribunal directing a pre-deposit of 50% of the disputed taxes stands vitiated inasmuch as it fails to see that the condition imposed is such which for all intent and purport takes away the appellants vested right of appeal and works as a deterrent or disables and impedes access to a forum viz., CESTAT which is meant for redressal of the grievance of an assessee suffering an adverse order, and results in rendering the statutory remedy of appeal illusory ? 7. As the appeal itself is against the miscellaneous order passed by the CESTAT directing 50% payment of pre-deposit , the main appeal itself is taken up for final disposal with the consent of both the parties. 8. The learned counsel appearing for the appellant submitted that the Tribunal....
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....waiver of pre-deposit of the entire amount of tax, interest and penalty had directed payment of 50% of the tax, which shows that the Tribunal had considered "undue hardship" pleaded by the appellant as well. Therefore, the learned counsel submitted that the said order passed by the Tribunal does not warrant any interference, as the said order has taken care of the interest of the Revenue as as well as the undue hardship pleaded by the appellant. In support of his submissions, the learned Counsel appearing for the Revenue relied on the decision of the Apex Court in Benara Valves Ltd., and Others Vs. Commissioner of Central Excise and Another (2006 (204)E.L.T 513 (SC) and two unreported decisions passed by the Division Bench of this Court in C.M.A.No. 1613 of 2011 dated 24.6.2011 ( M/s.IndusInd Bank Ltd., Vs. The Commissioner of Service Tax) and W.A.No. 419 of 2012 dated 17.7.2012 (Commissioner of Customs and Central Excise Vs. M/s.Visaka Industries Ltd.,) and the order of the Hon'ble Supreme Court made in SLA (Civil) No. 24321 of 2012 on 27.8.2012. 11. Heard the learned counsel appearing for either side. 12. The present appeal filed before this Court is against an interim orde....
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....pre-deposit is mandatory and dispensing with the same is discretionary. Keeping this in mind, let us consider the matter further. 17. The Tribunal pointed out at paragraph 4 of its order that from the perusal of the agreement, prima facie it found force in the submission of the learned counsel appearing for the Revenue and that the appellant failed to make out a prima facie case for waiver of predeposit of the entire amount of tax, interest and penalty. Consequently, the Tribunal directed 50% of the pre-deposit. 18. It is relevant to note at this juncture the decision of the Hon'ble Supreme Court reported in 2008 AIR SCW 6004 (Monotosh Saha Vs. Special Director, Enforcement Directorate and Another), as follows:- 11. Two significant expressions used in the provisions are "undue hardship to such person " and "safeguard the realisation of penalty". Therefore, while dealing with the application twin requirements of considerations i.e. Consideration of undue hardship aspect and imposition of conditions to safeguard the realisation of penalty have to be kept in view." 19. Even though the said decision was made while dealing with the order of pre-deposit contemplated under Foreign....
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....enara Valves Ltd., and Others Vs. Commissioner of Central Excise and Another (2006 (13) SCC 347). The decision was rendered in relation to Section 35F of the Central Excise Act, 1944 where also identical stipulations exist." 20. The very same view was expressed by the Apex Court in another decision relied on by the Revenue reported in Benara Valves Ltd., and Others Vs. Commissioner of Central Excise and Another (2006 (204)E.L.T 513 (SC). 21. By following the above decision of the Apex Court, a Division Bench of our High Court in the decision reported in 2011 (270) E.L.T. 519 (Mad) (Fayshaw Apparels Vs. ATFE, New Delhi) wherein one of us (R.Banumathi,J.) was a party, held that interim order of dispensation of deposit should not be passed, merely by establishing a prima facie case and only where it appears that the penalty imposed has no legs to stand or it would be undesirable to ask the appellant to pay the full or part of the penalty, the Appellate Tribunal can dispense with the condition of pre-deposit of penalty. It is also observed therein that the courts will have to keep in view the interest of the revenue of the State/Government Exchequer, while considering the application....
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....ts made in the affidavit are too general in nature without there being any specific averments of the facts and figures to establish the undue hardship. However, now before this court, the learned counsel appearing for the appellant placed the balance sheet as on March 31, 2012 and the statement of Profit and Loss for the year ended March 31, 2012 to show the loss suffered by the appellant. Admittedly, these documents were not placed before the Tribunal, which is a fact finding authority. It is also not specifically pleaded in the affidavit filed before the Tribunal about these facts. Therefore, we cannot find fault with the Tribunal in passing the impugned order. On the other hand, though the Tribunal has not specifically stated in so many words about "undue hardship", yet by passing the very order directing the appellant to deposit only 50% of the tax amount, it could be seen that the Tribunal had considered the undue hardship also. 27. Learned counsel for the appellant relied on the decisions as stated supra only to show that non-consideration or non-application of mind on relevant factors will be regarded as manifest error. As we found that the Tribunal had given a prima facie ....