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Judgment
R. Sudhakar, J.
This Civil Miscellaneous Appeal is filed challenging the order of the Customs, Excise and Service Tax Appellate Tribunal dated 10.06.2014.
The appellant was providing various services on behalf of Malaysia Airlines in connection with transportation of Air Cargo including issue of Air Way bills. During the verification of the sales records, it was noticed that the appellant had not discharged the service tax liability to the tune of Rs.1,60,82,229/-. Hence, a show cause notice dated 29.7.2010 was issued to the assessee as to why service tax should not be demanded along with interest and penalty. After considering the reply filed by the appellant, the Adjudicating Authority passed an order on 14.12.2011 confirming the demand of service, apart from imposing interest and penalty. Against the said order the assessee preferred an appeal before the Tribunal along with an application for stay and waiver of pre-deposit.
The Tribunal, on an earlier occasion, in respect of the appellant''s own case passed an order in Miscellaneous Order Nos. 42207 and 42208 of 2013 on 5.9.2013, which reads as follows:
"We have considered the submissions on both sides. We find that the order in the case of Team Global Logistics Pvt. Ltd. was passed by the Tribunal with reference to the activity of canvassing cargo for transportation through ocean. Since ocean freight itself was not taxable under any entry, it was considered proper to grant total waiver. In the case before us, the issue is service of canvassing air cargo which is actually a taxable service though exemption is provided in respect of export cargo. Transportation activity is predominantly done outside. Canvassing of cargo is done in India. So taxability of both the activities are to be treated differently. So the argument that there cannot be a Business Auxiliary Service for a non-taxable service may not be applicable to the instant case. We find that in this case the service is taxable but exempted. In the other cases relied upon by the advocate, there were other elements like, CHA service, ocean freight service etc. involved. Therefore the facts are not identical. The decision of Excel India Pvt. Ltd. (supra) is prima facie more applicable to the facts of this case. Therefore, we direct the applicant to make a pre-deposit of 50% of the tax demanded within 8 weeks and report compliance on 18.11.2013. subject to such deposit, pre-deposit of balance dues arising from the impugned order is waived for admission of appeal and there shall be stay on collection of such dues during pendency of the appeal."
The Tribunal, however, noticed, that insofar as the present case is concerned, there was a plea for waiver of pre-deposit on the ground that there was financial crisis and hardship and submitted the balance sheet of the year ended 31.3.2014. The Tribunal, however, though it fit not to differ from the earlier order imposing condition that the appellant should make pre-deposit of 50% of the tax for the subsequent period, passed the following order:
"5. In view of the above discussion and following the earlier stay order, we direct the applicant to predeposit Rs.80,00,000/- (Rupees eight lakhs only) within a period of eight weeks and report compliance on 19.8.2014. Upon such deposit, predeposit of the balance dues stand waived and recovery thereof stayed during the pendency of the appeal."
Aggrieved by the order of the Tribunal, the present Civil Miscellaneous Appeal is filed.
Learned counsel appearing for the appellant pleaded that the appellant had not challenged the earlier order of the Tribunal passed in respect of the appellant and the direction of pre-deposit was complied with. However, the appellant is now facing financial hardship. She points out that the business operation was carried out by the company upto 31.7.2013, which is evident from the balance sheet for the year ended 31.3.2014. The company is suffering actual financial crisis and their business had already stopped and therefore the appellant has no financial liquidity to pay the demand and, therefore, the plea of undue hardship has not been properly considered by the Tribunal. Hence, the entire pre-deposit amount may be waived.
We find much force in the plea of the appellant regarding undue hardship and financial difficulty in pursuing the appeal on payment of the pre-deposit as ordered by the Tribunal. The same, therefore, requires to be modified considering the prima facie case of the appellant.
At this juncture, it is apposite to refer to a decision of the Supreme Court in Benara Valves Ltd. and Others Vs. Commissioner of Central Excise and Another, , wherein it has been held as under:
"8. It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no legs to stand on, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a licence to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens faith in the impartiality of public administration, interim relief can be given."
It has become an unfortunate trend to casually dispose of stay applications by referring to decisions in Siliguri Municipality and Others Vs. Amalendu Das and Others, and Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and Others, cases without analysing factual scenario involved in a particular case.
Section 35-F of the Act reads as follows:
"35-F. 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 the Revenue:
Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing."
Two significant expressions used in the provisions are undue hardship to such person and safeguard the interests of the Revenue. Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interests of the Revenue have to be kept in view.
As noted above there are two important expressions in Section 35-F. One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva Vs. State of Karnataka and others, that under Indian conditions expression undue hardship is normally related to economic hardship. Undue which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances.
For a hardship to be undue it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it.
The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant.
The other aspect relates to imposition of condition to safeguard the interests of the Revenue. This is an aspect which the Tribunal has to bring into focus. It is for the Tribunal to impose such conditions as are deemed proper to safeguard the interests of the Revenue. Therefore, the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to undue hardship and also to stipulate conditions as required to safeguard the interests of the Revenue.
For the foregoing reasons, we pass the following order:
(i) The order of the Tribunal dated 10.6.2014 is modified to the effect that the appellant shall make a pre-deposit of Rs.50,00,000/- (Rupees Fifty Lakhs only) less the amount already deposited, if any, towards pre-deposit on or before 12.12.2014 and subject to such compliance, as stated in the order of the Tribunal dated 10.6.2014, the pre-deposit of balance amount demanded shall remain waived and its collection shall stand stayed during the pendency of the appeal before the Tribunal; and
(ii) on receipt of such payment, the Tribunal is directed to take up the appeal and dispose of the same on merits and in accordance with law.
In the result, this appeal is ordered in the above terms. No costs. Consequently, M.P.No. 1 of 2014 is Closed.