By TIOL News Service

HYDERABAD, SEPT 24, 2013: THE Short History : The petitioner which is a society registered under the provisions of the Registration of Societies Act, 1860, has been operating educational institutions and imparting education through Junior Colleges and Coaching centers.

Commissioner of Customs, Central Excise and Service Tax, Guntur passed an Order in Original dated 11.06.2009 confirming the demand of Service Tax on the income received by the petitioner for the period 01.04.2003 to 31.03.2007 under the head of “Commercial Training or Coaching Services”. The Tax demanded was over Rs. 87 Crores and the penalty imposed was Rs. 150 Crores apart from other penalties.

The CESTAT by its order reported in 2010-TIOL-1306-CESTAT-BANG granted unconditional stay and total waiver of pre-deposit.

Against the above CESTAT order, the Revenue approached the Andhra Pradesh High Court which in its order reported in 2011-TIOL-147-HC-AP-ST remanded the case back to the CESTAT consider the balance of convenience and financial hardship while disposing the stay application.

The CESTAT passed a fresh order on 18.4.2011 maintaining the full waiver of pre-deposit granted to the petitioner and staying the recovery till the disposal of the appeal. (2011-TIOL-661-CESTAT-BANG)

The Department again questioned this order before the High Court which set aside the order of the CESTAT and ordered pre deposit of Rs. 80 Crores which is about 1/3rd of the Tax and Penalty. (2011-TIOL-694-HC-AP-ST)

This time, the party went in appeal to the Supreme Court. The Supreme Court by its order dated 6.1.2012 reported in 2012-TIOL-02-SC-ST - reduced the pre-deposit to one third of the tax – that is about Rs. 29 Crores. The assessee complied with this order.

Now comes the demand for the subsequent periods 2007-08, 2008-09, 2009-10  and 2010-11 for which two orders were passed by the Commissioner demanding a tax of Rs. 69 Crores and Rs. 13 crores.

This was also challenged before the CESTAT which by its order reported in 2013-TIOL-1375-CESTAT-BANG directed pre-deposit of Rs. 25 crores.

The assessee filed a modification petition against the above order which the Tribunal by its order reported in 2013-TIOL-1376-CESTAT-BANG rejected.

Against the above order, the assessee is before the AP High Court.

The High Court observed, “As per the first proviso to Section 35F of the Central Excise Act, pre-deposit of the duty demanded or penalty levied can be waived where the Appellate Tribunal is of the opinion that such deposit would cause undue hardship to the applicant. As we could see, the Order dated 5.4.2013 came to be passed taking into consideration all the relevant factors including the orders passed by this Court and the Apex Court in respect of the earlier demand made for the period 2003-2007 and the payments that were already made by the petitioner. Thus adopting a reasonable approach, the pre-deposit was restricted to Rs.25 Crores which in fact is less than 1/3 rd  of the total demand of Service Tax and Education Cess.  The petitioner's request for modification of the said order was rejected assigning valid reasons therefor.

On a perusal of the Order, dated 5.4.2003 and the impugned order dated 15.07.2013, we are of the opinion that the condition of pre-deposit of Rs.25 Crores was imposed on proper exercise of the discretion vested in the Appellate Tribunal and on proper appreciation of the facts and circumstances of the case. Therefore, the impugned order which cannot be treated either arbitrary or irrational, warrants no interference by us on any ground whatsoever. “