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Service Tax - Appeals - Pre-deposit of Rs. 20 Crore ordered by Tribunal on Agency of State, waived - High Court

By TIOL News Service

MUMBAI, OCT 24, 2014: THE appellant assessee is the City and Town Development Authority on which the CESTAT had ordered a pre-deposit of Rs. 20 Crores (See 2014-TIOL-1368-CESTAT-MUM).

In the High Court, the appellant submitted that the Tribunal has found that it has made out a strong prima facie case. The Tribunal has also found that the issue is arguable. The Tribunal has also not disputed that the Appellant is a State of Maharashtra undertaking and is a New Town Development Authority within the meaning of the said term appearing under the “Maharashtra Regional and Town Planning Act, 1966.” In such circumstances, it being an organization or agency of the State, the dues of the Revenue are secured. Having directed the public authority to pay a sum of Rs.20 Crores, at this stage, has caused prejudice and when the question of law has been answered in favour of such Assessee's.

Revenue submitted that the order passed and impugned in this Appeal, is just, fair and proper as against a demand of Rs.136 Crores. The Tribunal has only directed the deposit of Rs.20 Crores. In such circumstances, the Appeal does not raise any substantial question of law.

The High Court observed,

While reserving any opinion on the correctness of this view, what we find is that the point at this stage appears to be prima facie covered in favour of the Appellant Assessee. In these circumstances, the Tribunal should not have insisted even otherwise on securing a Revenue in the sum of Rs.20 Crores as directed. This was a fit case when the precondition of the deposit of the duty liability could have been waived and in its entirety. Further, the recovery of taxes should have been stayed unconditionally pending disposal of the Appeal.

The appeal is allowed by setting aside the impugned order. There shall be waiver of the precondition of deposit of the tax/duty demanded and unconditional stay of recovery during the pendency of the Appeal before the Tribunal.

(See 2014-TIOL-1858-HC-MUM-ST)


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