TaxTMI 
TaxTMI 
2015 (7) TMI 391
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....oforma invoice from the Indian vendors/manufacturers, the Letter of Credit would be transferred to the respective vendors/manufacturers, after retaining the margin of the petitioner. Once the shipment of the goods was effected, the documents from the vendors would reach the petitioner bank through the vendor's bank and only thereafter, the petitioner would substitute their invoice and bills of exchange permissible as per UCP and then the documents were sent to the buyers situated abroad. Upon receipt of the payment, the petitioner's bankers would credit the petitioner with the margin in convertible foreign currency and the rest of the amount would be sent to the vendors in convertible foreign currency. In this background, the issue raised in the Writ Petition is whether the receipt of Letter of Credit Margin/Trade margin by the petitioner in convertible foreign exchange for rendering service to various overseas buyers are liable to service tax under the category of ''Business Auxiliary Services'' as per Section 65(19) of the Finance Act. 3. The learned counsel appearing for the petitioner would further submit that the petitioner received a notic....
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.... of 7.5% of the tax amount confirmed against the petitioner as a pre-condition for making the appeal before the CESTAT. 6. Per contra, Mr.V.Sundareswaran, learned counsel appearing for the respondent, heavily opposing the above prayer would submit that the contentions made by the petitioner that he should be allowed to file his appeal before the CESTAT without making the payment of 7.5% of the tax amount confirmed against the petitioner as pre-condition for maintaining the appeal cannot be accepted since neither the Hon'ble High Court of Kerala nor the Andhra Pradesh High Court has dealt with the second proviso to Section 35(F) of the Act. In support of his submission, after referring to the entire proviso including second proviso to Section 35(F), he has also placed on record the judgment of the Kerala High Court in K.V.Raghunathan Pillai ..vs.. The Commissioner of Central Excise, Customs and Service Tax, Thiruvananthapuram to impress upon this Court that reading of second proviso to Section 35(F) as contained in the Finance Act itself shows that the provision relied on by the learned counsel appearing for the petitioner shall not apply to stay applications and appeals ....
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.... to the commencement of the Finance Act (2 of 2014). In the present case, as contended by the learned counsel appearing for the respondent to apply the second proviso in order to deny the benefit of filing the appeal without making the payment of 7.5% before the CESTAT, it should be mentioned that the petitioner as against the Order-in-Original passed by the respondent on 27.02.2015, till date has not filed any appeal nor moved any stay application. Therefore, the petitioner, as rightly contended, is entitled to have the benefit of the ratio laid down by both the Kerala High Court and Andhra Pradesh High Court in the afore-mentioned judgments. 9. In this regard, it is necessary to extract the view taken by the Hon'ble High Court of Kerala at Ernakulam in WP(C).No.6173/15 (V) dated 02.03.2015 in M/s.Muthoot Finance Limited ..vs.. Union of India and another, which reads as follows:- "4. .......... The only point that arises for consideration is whether the petitioner would have to deposit the amount of 7.5% of the tax confirmed against him, as a condition for pursuing the appellate remedy before the Tribunal. I note in this connection that recently, a Division Bench....
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....erits of the case, and without prejudice to all the contentions that the petitioner can take against Ext.P8 order of the 2nd respondent, I dismiss the writ petition in its challenge against Ext.P8 order. I make it clear that, if the petitioner prefers a duly constituted appeal under the provisions of the Finance Act, 1994, as they stood prior to 16.08.2014, then the Appellate Tribunal shall number the Appeal, and consider the application filed by the petitioner for waiver of pre-deposit and stay of recovery of the amounts confirmed against him by Ext.P8 order, on merits and thereafter, proceed to hear the appeal itself in due course. The petitioner shall file the appeal, together with the application for waiver of pre-deposit and stay, before the Appellate Tribunal on or before 31.03.2015. 10. The above view has been followed in a subsequent case reported in 2015 TIOL 895 HC Kerala ST (Secretary to Government, Department of Agriculture, Government of Kerala and another ..vs.. Union of India represented by the Secretary, Ministry of Finance (Department of Revenue), New Delhi and another) , which reads as under:- "5. Counsel for the petitioner would point out that as pe....
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....upur and others ..vs.. Cameo Exports and others), the Hon'ble Division Bench of this High Court, while answering the question as to when such a pre-existing right of appeal becomes vested in a party- Is it on the date of filing of the returns ? Or is it on the date when a pre-assessment notice is issued ? Or it is on the date when proceedings are initiated for reopening an assessment ?, this Court has answered categorically that the assessee's right to file an appeal and a further appeal under the earlier Act is a vested right and such a right becomes vested in the assessee, the moment he filed his return which commenced the assessment proceedings. 13. To appreciate with clarity, it is pertinent to mention few facts involved in the case of Deputy Commercial Tax Officer, Tirupur Central I Assessment Circle, Tirupur and others ..vs.. Cameo Exports and others mentioned supra. The assessees therein filed Appeals before the Assistant Commissioner under Section 31 of the Tamil Nadu General Sales Tax Act, 1959, against the orders of assessment, but the Appeals were rejected by the appellate authority on the ground that they were not accompanied by the proof of payment of 25....