By TIOL News Service

BANGALORE, MAY 10, 2014 : AGAINST an order passed by the CCE, Bangalore-I confirming a Service Tax demand of Rs.2,76,48,398/- for the period from 16-05-2008 to 28-02-2010, the appellant had filed an stay application/appeal before the Appellate Tribunal. The Tribunal while entertaining the appeal, directed the appellant to deposit a sum of Rs.50,00,000/- as pre-deposit within a period of six weeks.

Being aggrieved with this order, the appellant, Bangalore Water Supply & Sewerage Board has filed an appeal before the Karnataka High Court.

It is submitted that the appellant is the Statutory Board fully controlled and financed by the State Government and discharging public functions of supplying portable water and other sewage works. That, in view of the Board Circular No. 89/7/2006-ST a Statutory Board like appellant need not pay the pre-deposit since they are discharging the public duties and are set up by the State Government. And hence the order of pre-deposit should be set aside.

The counsel for the Revenue submitted that for entertaining the appeal before the Tribunal, the condition precedent is that the appellant has to deposit the entire amount;however, the Tribunal has discretion to exempt payment of the said amount in exceptional cases;since in the instant case, the appellant has not made out any exceptional case regarding hardship they have been directed to make a pre-deposit of Rs.50 lakhs and, therefore,the order is proper & legal.

The High Court observed that under Section 35F of the Act, the appellant has to deposit the entire amount to maintain the appeal. However, where in any particular case, the Appellate Tribunal is of the opinion that depositing of the said amount would cause undue hardship to such person, the Tribunal may dispense with such deposit subject to such condition as it may deem fit to impose so as to safeguard the interest of the Revenue.

After extracting the provisions of Section 35F of the CEA, 1944, the High Court concluded -

“7. Reading of the above provision makes it very clear that the pre-deposit of the amount demanded is one of the conditions precedent to maintain the appeal. The pre-deposit of the amount due is applicable to the statutory authority set up by the State Government. When the Legislature has not made any distinction, we cannot make any distinction by judicial order. Therefore, we do not find any justification to interfere with the order passed by the Appellate Tribunal….”

The appeal was dismissed but in the interest of justice the time for making pre-deposit was extended by four weeks.

(See 2014-692-TIOL-HC-KAR-ST)