Delhi Transport Corporation vs Commissioner of Service Tax

Issue Notice. Mr. Kamal Nijhawan, Advocate and Mr. Saurabh Kirpal, Advocate accepts notice on behalf of respondent Nos. 1 and 2-4 respectively, an that writ petition can be disposed of finally at this stage. The writ petitioner-DTC is aggrieved by an order of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) dated 5-12-2011 whereby it was directed to deposit Rs. 3.5 crores as a condition for hearing of its appeal i.e. Appeal Nos. 174-176/2010.

The writ petitioner contends that though the Tribunal noticed facts and circumstances whereby the amount of tax were not paid by it for the bona fide reason that the DTC was under the impression that its customers had done so - a fact which later on proved to be incorrect since there was an allegation of fraud vis-�-vis the customers, yet the Tribunal did not grant any waiver of pre-deposit.

Learned counsel for the respondents relied upon the order of the Tribunal and contended that the DTC cannot seek waiver of any part of the demanded amount and that the sum directed to be deposited is reasonable under the circumstances.

We have considered the facts of this case. There is no dispute that the DTC is a public authority. Its consistent position before the Revenue - including the CESTAT - was that the spaces which it had given to two customers meant that the latter had to deposit the service tax and that indeed they represented through documents that such liability is being discharged. However, later events disclosed that this was not the correct situation and that the spaces had further been sold and that the deposits had not been made. Having regard to these circumstances and particularly the fact that the DTC is a public authority and would be ultimately in a position to discharge the liability determined by Tribunal, this Court is of the opinion that the condition imposed cannot be sustained. The impugned order dated 5-12-2011 requiring pre-deposit of Rs. 3.5 crores is accordingly set aside. The CESTAT is directed to hear the appeals without the condition of any pre-deposit and decide the appeals at its earliest convenience and preferably within four months from today.

The W.P. (C) 753/2012 is allowed in the above terms. All contentions are left open. Order dasti.