Service Tax - Commercial Training or Coaching service –Pre-deposit - Sri Chaitanya Case - SC grants Rs 60 Cr Relief
THE Commissioner had demanded a Service Tax of more than Rs. 87 Crores and imposed a penalty of Rs. 150 Crores on Sri Chaitanya Educational Committee for the Service Tax payable for the period 2003-2007.
The Tribunal granted full waiver of pre-deposit () on the ground of limitation till the disposal of the appeal. The Department was not impressed and took the matter to the High Court. The High Court of Andhra Pradesh has set aside the order of the Tribunal and remanded the case by holding that the Tribunal ought not to have granted the order of stay or dispensation of pre-deposit without imposing conditions. ()
In remand proceedings, the Tribunal again did not order any pre-deposit keeping in view the fact of attachment of property valued at Rs 27 crores can be considered as enough security to safeguard the interest of revenue. ()
Against this order, the department filed appeal again in High Court. The High Court held that the order of the Tribunal granting blanket waiver of pre-deposit ex facie constituted a clear erroneous exercise of discretion, warranting interference in appeal under Section 35-G of the 1944 Act.
On behalf of revenue, it was urged that the assessee may be directed to deposit 50% of the service tax liability under Section 35 F of the Central Excise Act, 1944. Having considered the competing interests of the Revenue and the hardship that is likely to be caused to the assessee in case the entire amount of service tax and penalty is directed to be deposited, which is around Rs 240 cores (Rs 87 crores tax liability with Rs 150 crores penalty) the High Court had ordered that the assessee shall deposit 1/3rd of the amount of service tax and penalty, about Rs. 80.00 crores as pre-deposit under Section 35-F of the 1944 Act. ()
So, the Revenue got more than what it pleaded for. It asked for only 50 percent of 87 Crores, but it got 80 Crores!
Obviously, the party had to appeal to the Supreme Court, which it did. In the Supreme Court also, the Counsel for Revenue fairly pleaded for a pre-deposit of 50 percent of the tax and the Supreme Court allowed a pre-deposit of a third of the Service Tax demand, which would come to about Rs. 30 Crores. We bring you the Supreme Court today -
An aside: Meanwhile the Department attached the property of the assesse under non-existing rules. (Please see 07.12.2011). The assesse challenged this attachment also in the High Court, which was dismissed -