Rajasthan State Road Transport Corporation vs. The Union Of INDIA

Held

The Court held that while the statutory remedy of appeal before the CESTAT is generally the appropriate recourse, the petitioner's argument regarding the efficacy of this remedy, particularly in light of its acute financial crisis and the substantial pre-deposit amount required (₹1.35 crores), is sound. The Court also noted that, prima facie, the Commissioner's Order in Original failed to address the petitioner's submissions regarding the exemption for Stage Carriage Services, despite acknowledging them. Considering these peculiar circumstances, the Court directed that the appeal before the CESTAT should be decided on merits. As a condition for this, the petitioner was required to deposit a sum of ₹30 Lakhs within six weeks, which would form part of the overall pre-deposit. The Court clarified that if the petitioner succeeds in the appeal, this deposited amount would be adjusted against its liability. All contentions and rights of the parties were reserved.

Facts

The petitioner, Rajasthan State Road Transport Corporation (RSRTC), is challenging an order from the Commissioner of Service Tax demanding ₹8 crores. The demand is based on the Commissioner's finding that RSRTC is offering 'Tour Operator Services'. RSRTC contends that its operations involve plying buses between Jaipur and Delhi under Stage Carriage Permits, which are exempt from service tax under Notification No. 25/2012 ST dated 20.06.2012. RSRTC argues that the order and demand are contrary to law. The respondent Service Tax Department argued that the writ petition should not be entertained as an appeal lies under Section 86(1) of the Finance Act, 1994, before the Tribunal, which can examine both facts and law. RSRTC countered that the appeal remedy is not efficacious because it requires a pre-deposit of 7.5% of the demand, amounting to ₹1.35 crores, which it cannot afford due to acute financial shortage.

Key Issues

1. Whether the writ petition is maintainable before the High Court, or if the petitioner is relegated to the statutory remedy of appeal before the CESTAT under Section 86(1) of the Finance Act, 1994? 2. Whether the services provided by the petitioner, Rajasthan State Road Transport Corporation (RSRTC), constitute 'Tour Operator Services' attracting service tax, or if they are exempt Stage Carriage Services under Notification No. 25/2012 ST dated 20.06.2012? Petitioner's arguments: The petitioner argued that the statutory appeal remedy before the CESTAT is not efficacious due to the mandatory pre-deposit requirement of 7.5% of the demand (₹1.35 crores), which it cannot meet due to severe financial constraints. Furthermore, the petitioner contended that the Commissioner, in passing the Order in Original, failed to address or discuss its submissions regarding the exemption for Stage Carriage Services, making the order prima facie flawed. Respondents' arguments: The respondents (Service Tax Department) argued that the High Court should not entertain the writ petition and that the petitioner should avail the statutory remedy of appeal before the CESTAT, which is equipped to examine both factual and legal aspects of the case.