Madras High Court
M/S.Aluminium & Glazing vs Commissioner Of Central Excise ... on 12 February, 2013
Author: V.Dhanapalan
Bench: V.Dhanapalan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.2.2013
CORAM:
THE HONOURABLE MR.JUSTICE V.DHANAPALAN
W.P.No.3119 of 2013 & M.P.No.1 of 2013
M/s.Aluminium & Glazing,
Rep. by its Proprietor M.A.Albin Dhas,
274, Burma Colony, 1st Street,
Perungudi, Chennai-600 096. .. Petitioner
Vs.
1. Commissioner of Central Excise (Appeals),
Office of the Commissioner of
Central Excise (Appeals),
26/1, Mahatma Gandhi Road,
Chennai-600 034.
2. The Additional Commissioner of Central Excise,
Chennai II Commissionerate,
MHU Complex, 692, Anna Salai, Nandanam,
Chennai-600 035.
3. Commissioner of Service Tax,
No.2054, II Avenue, Newry Towers,
12th Main Road, Anna Nagar,
Chennai-600 040. .. Respondents
Writ Petition filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorari to call for the records of the respondents in A.No.473/2012(M-ST) in Pre-Deposit-cum-Appeal Order No.43/2012 (M-ST(PD)), dated 18.1.2013 passed by the first respondent and quash the same as arbitrary and illegal.
For petitioner : Mr.Joseph Prabakar
For respondents : Mr.Vikram Ramakrishnan, CGSC
ORDER
Heard Mr.Joseph Prabakar, learned counsel for the petitioner and Mr.Vikram Ramakrishnan, learned Central Government Standing Counsel appearing for the respondents.
2. The order passed by the first respondent-appellate authority in order in A.No.473/2012 (M-ST) in Pre-Deposit-cum-Appeal Order No.43/2012 (M-ST(PD)), dated 18.1.2013, whereby and whereunder, the authority has decided that for taking up the appeal, the pre-condition for depositing the entire amount of Rs.38,99,288/- towards service tax, with interest, penalty, etc., had been reduced to Rs.19,50,000/- under Section 35-F of the Central Excise Act (hereinafter referred to as 'the Act') made applicable to the Service Tax as per Section 83 of the Finance Act and the balance amount was waived, is called in question, seeking to quash the same as arbitrary and illegal.
3. According to the petitioner-Company, they are engaged in the business of structural glazing and registered with the Service Tax Department, vide Registration No.AEFPA6746LST001 under the category of "commercial or industrial construction services and construction of residential complex services". The work carried out by the petitioner-Company involves purchase and sale of materials like aluminium, glass, etc. and also rendering service. Accordingly, they have paid sales tax/VAT on the value of materials involved in the contract and they are also liable too pay service tax for the portion of the work involving services and they have paid service tax under 'erection, commissioning or installation' as per Section 65 (39a) of the Finance Act, 1994 and availed abatement of 67% as per Notification No.1/2006, dated 1.3.2006 and paid service tax on 33% of the total contract value.
4. While so, it is the case of the petitioner that a show cause notice in No.317/2009, dated 19.8.2009 was issued to the petitioner, denying the benefit of the said abatement of 67%. However, the petitioner filed reply, dated 5.10.2009 and attended personal hearing and thereafter, the matter was adjudicated by the second respondent-original authority, who passed the order in Order-in-Original No.19/2012, dated 28.3.2012, levying service tax of Rs.38,99,288/-, with interest, penalty, etc., against which, the petitioner filed appeal before the first respondent-appellate authority, which was numbered as A.No.473/2012(MST).
5. Thereafter, the first respondent issued a notice, dated 10.1.2013, calling for personal hearing on 18.1.2013 in the stay petition. The petitioner could not send their official for the personal hearing on 18.1.2013, and accordingly, their counsel requested to have the personal hearing after four weeks. However, the first respondent passed the impugned order, dated 18.1.2013, in Pre-Deposit-cum-Appeal Order No.43/2012 (M-ST(PD)) (in A.No.473/2012 (M-ST)), thereby directing the petitioner to pay the amount of Rs.19,50,000/- as pre-deposit in cash on or before 8.2.2013 under Section 35-F of the Act, made applicable to Service Tax as per Section 83 of the Finance Act and the balance was waived. The impugned order is challenged by the petitioner on the ground that there was no hearing of the stay petition and the request for adjournment of the personal hearing was not considered. Hence, the petitioner has filed this Writ Petition for the above relief.
6. Mr.Joseph Prabakar, learned counsel for the petitioner mainly focussed his arguments on the point that the petitioner-Company is not in a position to pay any amount, i.e. even the amount so reduced by the first respondent-appellate authority in the impugned order, which is a non-speaking order. The undue hardship of the petitioner-Company has not been taken into account by the first respondent.
7. Per contra, Mr.Vikram Ramakrishnan, learned CGSC appearing for the respondents submitted that the first respondent was so lenient in considering the prima-facie case, balance of convenience, undue hardship and financial burden of the petitioner-Company and thereby reduced the amount of pre-deposit to Rs.19,50,000/- from Rs.38,99,288/-, and such a lenient approach has been questioned by the petitioner, which is not permissible under law, and therefore, the Writ Petition is liable to be dismissed in-limine.
8. On the above background of pleadings and the submissions, I have heard the learned counsel appearing for the parties.
9. It is not in dispute that the petitioner is a Company engaged in the business of structural glazing and they purchase raw materials like aluminium, glass, etc. and also rendering service and registered their name with the Service Tax Department under the category of "commercial or industrial construction services and construction of residential complex services". The petitioner also paid service tax under "erection, commissioning or installation" as per Section 65(39a) of the Finance Act, 1994 and availed abatement of 67% as per Notification No.1/2006, dated 1.3.2006 and also paid service tax on 33% of the total contract value. A show cause notice, dated 19.8.2009 was issued to the petitioner, denying the benefit of abatement of 67%, and thereafter, the matter was contested by the parties and adjudication was made and the original authority passed the order on 23.8.2012 in Order-in-Original No.19/2012, levying service tax, interest, penalty, etc., against which, the petitioner filed appeal before the first respondent, which is pending. The condition for taking up the appeal is that there must be a pre-deposit of the amount in full, and therefore, the first respondent issued notice of personal hearing of the petitioner. As the petitioner did not send their official for the hearing on 18.1.2013, there is no other option for the first respondent but to pass the impugned order in Pre-Deposit-cum-Appeal Order No.43/2012 (M-ST(PD)), dated 18.1.2013, which is called in question in this Writ Petition by the petitioner, as there is still undue hardship for them.
10. It is to be noted that when once appeal is filed by the aggrieved person against the original order, it is mandatory requirement under Section 35-F of the Act to pay the entire amount ordered by the original authority, as a condition precedent for taking up the appeal.
11. Law is well settled that the capacity of a party to pay the pre-deposit amount had to be noticed and the financial burden and undue hardship for the party to resort to claim waiver of the pre-deposit have also to be considered. In this regard, it is worthwhile to notice a decision of a Division Bench of this Court reported in 2009 (235) ELT 231 (Trendy Moods Vs. Customs, Excise and Gold (Control) Appellate Tribunal, Chennai), wherein, this Court, after taking into account the various decisions of the Supreme Court, for and against, ultimately came to the conclusion that the capacity of the appellant therein to pay the amount having been noticed and in the absence of any financial burden, it cannot be construed that there is an undue hardship for the appellant therein to resort to claim waiver of pre-deposit.
12. The cardinal principle of consideration of the waiver of pre-deposit is based on undue hardship, prima-facie case, balance of convenience, financial burden and other difficulties expressed by the party before taking the matter on appeal and these factors have to be weighed in relevant circumstances, taking into account all the material facts, which alone can come to the wisdom of the authority to give certain waiver of pre-deposit to the party who is on appeal.
13. In this case, a sum of Rs.38,99,288/- as service tax, with interest, penalty, etc., were levied by the original authority, and thereafter, in the appeal stage, the petitioner was called for personal hearing on 18.1.2013, on which date, the petitioner did not send their official, and therefore, the first respondent passed the impugned order, reducing the amount to Rs.19,50,000/- as pre-deposit amount, and the prima-facie case, balance of convenience, undue hardship and financial burden, which were focussed by the petitioner, had been duly considered by the first respondent in accordance with law, while reducing the amount of pre-deposit to Rs.19,50,000/-, which is approximately 50% of the total amount due, and therefore, such a lenient approach made by the first respondent, in my considered opinion, cannot be called in question in this Writ Petition by the petitioner, particularly, when there is no substantial hardship made out by the petitioner. Such an approach made by the petitioner to file this Writ Petition challenging the order of pre-deposit, is no way called for interference by this Court, and therefore, the Writ Petition deserves no merit consideration, which is liable to be dismissed.
14. At this stage, learned counsel for the petitioner made a plea that the appeal pending before the first respondent-appellate authority may be directed to be disposed of within a time frame. It is needless to state that it is for the petitioner to pay the amount of pre-deposit as ordered by the first respondent in the impugned order, and on such payment to be made by the petitioner, the first respondent shall take up the appeal itself and dispose of the same, on merits and in accordance with law, within a period of four weeks from the date of payment of the pre-deposit amount.
15. With the above observations and directions, the Writ Petition is dismissed. No costs. The Miscellaneous Petition is closed.
cs To
1. Commissioner of Central Excise (Appeals), Office of the Commissioner of Central Excise (Appeals), 26/1, Mahatma Gandhi Road, Chennai-600 034.
2. The Additional Commissioner of Central Excise, Chennai II Commissionerate, MHU Complex, 692, Anna Salai, Nandanam, Chennai-600 035.
3. Commissioner of Service Tax, No.2054, II Avenue, Newry Towers, 12th Main Road, Anna Nagar, Chennai 600 040