Bangalore Water Supply and Sewerage Board vs Commissioner of Central Excise

This Central Excise Appeal is directed against the order dated 10-12-2013 made in Misc. Order No. 28268/2013 in ST/1712/2012-DB passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore (hereinafter referred to as ''the Appellate Tribunal'' for short) directing the appellant to deposit a sum of Rs. 50,00,000/- within a period of six weeks towards pre-deposit, which is a condition precedent for maintaining an appeal. The appellant being aggrieved by the order dated 29-02-2012 passed by the Commissioner of Central Excise, Bangalore-I Commissionerate Bangalore directing the appellant to pay - a sum of Rs. 2,76,48,398/- towards service tax payable including all Cess for the period from 16-05-2008 to 28-02-2010, filed an appeal before the Appellate Tribunal and also made an application for stay of the order passed by the Commissioner. The Tribunal while entertaining the appeal, directed the appellant to deposit a sum of Rs. 50,00,000/- towards pre-deposit to maintain the appeal u/s 35F of the Central Excise Act, 1944 (for short ''the Act'') within a period of six weeks and the recovery of the remaining amount was stayed. The appellant being aggrieved by the order passed by the Tribunal directing the appellant to deposit a sum of Rs. 50,00,000/- towards pre-deposit has filed this appeal.

Sri. V.S. Arbatti, learned counsel appearing for the appellant contended that the appellant is the Statutory Board fully controlled and financed by the State Government and discharging public functions of supplying portable water and other sewage works. He submits that the Board Circular No. 89/7/2006-ST dated 23-08-2007/18-12-2006, the Statutory Board like appellant need not pay the pre-deposit since they are discharging the public duties and are set up by the State Government. The contentions raised by the appellant were not considered while granting interim order, hence sought for setting aside the order passed by the Appellate Tribunal directing the appellant to deposit a sum of Rs. 50,00,000/- towards pre-deposit.

On the other hand, Sri. Shashikanth, learned Central Government Standing Counsel appearing for the respondent-authority argued in support of the order passed by the Tribunal and contended that for entertaining the appeal before the Tribunal, the appellant has to deposit the entire amount. However, the Tribunal has discretionary to exempt payment of the said amount in exceptional cases. In the instant case, the appellant has not made out any exceptional case regarding hardship. It is a condition precedent that while filing the appeal the entire deposit has to be made and sought for dismissal of the appeal.

We have carefully considered the arguments addressed by the learned counsel for the parties and perused the orders passed by the Appellate Tribunal.

u/s 35F of the Act, the appellant has to deposit the entire amount to maintain the appeal. However, where in any particular case, the Appellate Tribunal is of the opinion that depositing of the said amount would cause undue hardship to such person, the Tribunal may dispense with such deposit subject to such condition as it may deem fit to impose so as to safeguard the interest of the Revenue. Section 35F reads as under:

35F. Deposit, pending appeal of duty demanded or penalty levied- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of central excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied:

Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue:

Reading of the above provision makes it very clear that the pre-deposit of the amount demanded is one of the conditions precedent to maintain the appeal. The pre-deposit of the amount due is applicable to the statutory authority set up by the State Government. When the Legislature has not made any distinction, we cannot make any distinction by judicial order. Therefore, we do not find any justification to interfere with the order passed by the Appellate Tribunal. Accordingly, we pass the following:

ORDER

The appeal is dismissed. However, in the interest of justice, the time is extended by four weeks from today to deposit the amount as per the directions of the Tribunal. The Tribunal shall consider the matter on merits without being uninfluenced by any of the observations in the appeal.