Vindhya Security Service Behind Gallamandi vs. Union Of INDIA

Held

The High Court held that the learned Tribunal had wrongly directed the deposit of the entire balance amount of Rs. 19,07,438/- to obtain a stay on recovery. The Court noted that the appellant had already deposited almost 50% of the total demand of Rs. 42,56,480/-. It reasoned that the appellant was not liable to deposit the entire balance amount, as this was not a requirement under Section 35 of the Central Excise Act, either pre- or post-amendment. The Court concluded that the maximum pre-deposit amount should be 7.5% and that the Tribunal's direction was erroneous. The Court directed that the appeal pending before the Tribunal be decided, if it was still pending, and disposed of the present appeal accordingly.

Facts

The petitioner, Vindhya Security Service, filed an appeal against an interlocutory order dated November 19, 2014, passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT had directed the petitioner to deposit the balance service tax amount of Rs. 19,07,408/- along with proportionate interest within six weeks, subject to which the recovery of the remaining adjudicated tax liability would be stayed. The petitioner had been engaged in providing security and manpower recruitment services, which are taxable. A demand of Rs. 42,56,480/- was raised, out of which Rs. 23,49,072/- was deposited, leaving a balance of Rs. 19,07,438/-. The petitioner challenged the CESTAT's order regarding the pre-deposit amount.

Key Issues

1. Whether the learned Tribunal committed a substantial error in directing the appellant to pre-deposit the balance adjudicated service tax liability amounting to Rs. 19,07,408/- along with proportionate interest within 6 weeks, ignoring the amendment made under Section 35F of the Act and Circular dated 16.09.2014 issued by the Central Board of Excise and Customs, which provides for the deposit of only 10% of the amount of duty demanded or penalty imposed by the Adjudicating Authority? Petitioner's Contention: The petitioner argued that the CESTAT erred by not considering the amendment to Section 35F of the Act and the Circular dated 16.09.2014, which stipulated a pre-deposit of only 10% of the duty demanded or penalty imposed for filing an appeal. They contended that this circular should govern the pre-deposit requirement. Revenue's Contention: The respondent argued that the circular would not apply in this case because it pertained to short payment or non-payment of tax, whereas the appellant was liable to deposit the entire balance tax liability amounting to Rs. 19,07,408/-.