Case Note & Summary
The Security Guards Board for Greater Mumbai and Thane District, a statutory authority constituted under Section 6 of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981, filed an appeal against an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 6 May 2011. The Tribunal had directed the Board to deposit 50% of Rs. 9,76,97,740/- under Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, as a condition for hearing the appeal against a service tax demand of Rs. 12,90,54,553/-. The Board sought complete waiver of the pre-deposit requirement, arguing that it is a statutory Board not carrying on any business and thus does not fall within the definition of 'person' under Section 65(94) of the Finance Act, 1994, which defines 'service tax' and related terms. The High Court admitted the appeal on the substantial question of law whether the Tribunal was justified in rejecting the application for complete waiver of pre-deposit, considering that a serious triable issue arises as to whether the Board is liable to service tax. The Court noted that the Board is a statutory authority responsible for administering a scheme for regulation of employment of private security guards, and its functions are regulatory and welfare-oriented, not commercial. The Court held that the Tribunal ought to have considered the prima facie case of the Board and the serious triable issue involved, and thus allowed the appeal, setting aside the impugned order and directing the Tribunal to hear the appeal without insisting on pre-deposit.
Headnote
A) Service Tax - Pre-deposit Waiver - Section 35F of Central Excise Act, 1944 read with Section 83 of Finance Act, 1994 - The Appellant, a statutory Board constituted under the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981, challenged the CESTAT order directing deposit of 50% of Rs. 9,76,97,740/- as a condition for hearing the appeal against a service tax demand of Rs. 12,90,54,553/-. The High Court admitted the appeal on the substantial question of law whether the Tribunal was justified in rejecting the application for complete waiver of pre-deposit, considering that a serious triable issue arises as to whether the Board, being a statutory authority not carrying on business, falls within the purview of Section 65(94) of the Finance Act, 1994. (Paras 1-5)
Issue of Consideration
Whether the Tribunal was justified in rejecting the application of the Appellant for a complete waiver of the requirement of pre-deposit having regard to the fact that a serious triable issue arises in the appeal and the Appellant seeks to establish that prima facie it does not carry on a business but is a statutory Board which does not fall within the purview of Section 65(94) of the Finance Act of 1994 as amended?
Final Decision
Appeal allowed. Impugned order of CESTAT dated 6 May 2011 set aside. The Tribunal is directed to hear the appeal without insisting on pre-deposit.
Law Points
- Pre-deposit waiver under Section 35F of Central Excise Act
- 1944 read with Section 83 of Finance Act
- 1994
- Prima facie case
- Serious triable issue
- Statutory Board not carrying on business
- Service tax liability under Section 65(94) of Finance Act
Case Details
2011 LawText (BOM) (09) 106
Central Excise Appeal No. 119 of 2011 (Old Writ Petition No.1237 of 2011)
Dr. D.Y. Chandrachud, A.A. Sayed
Ms. Lata Desai with Dr. Pallavi Divekar for the Appellant, Mr. Pradeep S. Jetly i/by Ms. Suchitra Kamble for the Respondent
The Security Guards Board for Greater Mumbai and Thane District
Commissioner of Central Excise Thane-II, Union of India
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Nature of Litigation
Appeal against order of CESTAT directing pre-deposit of 50% of service tax demand as condition for hearing appeal.
Remedy Sought
Complete waiver of pre-deposit requirement under Section 35F of Central Excise Act, 1944 read with Section 83 of Finance Act, 1994.
Filing Reason
The Appellant, a statutory Board, challenged the CESTAT order directing deposit of 50% of Rs. 9,76,97,740/- as condition for hearing appeal against service tax demand of Rs. 12,90,54,553/-.
Previous Decisions
CESTAT order dated 6 May 2011 directing pre-deposit of 50% of Rs. 9,76,97,740/-.
Issues
Whether the Tribunal was justified in rejecting the application for complete waiver of pre-deposit having regard to the fact that a serious triable issue arises in the appeal and the Appellant seeks to establish that prima facie it does not carry on a business but is a statutory Board which does not fall within the purview of Section 65(94) of the Finance Act of 1994 as amended?
Submissions/Arguments
Appellant argued that it is a statutory Board not carrying on any business and thus does not fall within the definition of 'person' under Section 65(94) of the Finance Act, 1994, raising a serious triable issue.
Respondent opposed the waiver, contending that the Board is liable to service tax.
Ratio Decidendi
Where a serious triable issue arises as to whether the appellant is liable to service tax, and the appellant has a prima facie case that it is a statutory Board not carrying on business, the Tribunal ought to grant complete waiver of pre-deposit under Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.
Judgment Excerpts
The appeal arises out of an order passed by the CESTAT on 6 May 2011 on an application for waiver of pre-deposit and for stay of recovery in respect of a demand for service tax in the amount of Rs. 12,90,54,553/-.
The Tribunal has directed the Appellant to deposit an amount representing 50% of Rs. 9,76,97,740/- under Section 35F of the Central Excise Act read with Section 83 of the Finance Act, 1994.
The appeal is admitted on the following substantial question of law: 'Whether the Tribunal was justified in rejecting the application of the Appellant for a complete waiver of the requirement of pre-deposit having regard to the fact that a serious triable issue arises in the appeal and the Appellant seeks to establish that prima facie it does not carry on a business but is a statutory Board which does not fall within the purview of Section 65(94) of the Finance Act of 1994 as amended?'
Procedural History
The Appellant initially filed a Writ Petition under Article 226 of the Constitution of India, which was converted into a Central Excise Appeal. The appeal challenges the CESTAT order dated 6 May 2011 directing pre-deposit of 50% of Rs. 9,76,97,740/- as condition for hearing the appeal against a service tax demand of Rs. 12,90,54,553/-.
Acts & Sections
- Central Excise Act, 1944: Section 35F
- Finance Act, 1994: Section 65(94), Section 83
- Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981: Section 6, Section 3, Section 8
