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Judgment
P.C. Rule : Heard forthwith.
The Tribunal in the impugned order directed to pre-deposit a sum of Rs. 2 crores plus service tax within 8 weeks of its order dated 20-4-2009 (2009) 18 STJ 89 (Tri. - Mumbai) and further passed an order that failure to comply with the directions will result in dismissal of their appeal without any further notice to them. Petition is filed on 24-6-2009. Appeal has not been disposed off by the separate order. The effect however of order dated 20-4-2009 would be that if the amount has not been deposited then the appeal itself would stand dismissed. Prayer Clause (a) in the petition is to impugn the said order.
In the instant case, petitioner have received consideration from M/s. Cadila Health Care Ltd. for transfer of formulation as also assignment of trade marks as also from technical know-how and technology transfer fees. Apart from that, they have received an amount by way of marketing assistance fees in connection with the above transactions and service charges. Service tax would be payable in the event, agreements result in rendering of any advice or consultancy or scientific or technical assistance. In other words, transfer of brand name, transfer of patent right, prima facie would 2[not] fall within 2[these] predicates. Petitioners, therefore, have made out a prima facie case. Petitioners also had filed their balance sheet which shows that for 9 months up to 31-12-2008, they had incurred a loss of Rs. 13.28 crores.
Considering the above and the financial hardship that would cause to the petitioner and the petitioner is a going concern, in our opinion, ends of justice would be met when the impugned order is partly modified. Courts and Tribunals must bear in mind that when the company is functioning, the order of pre-deposit shall not result in the company having to bear undue financial burden which would result in affecting production and may also result in loss of jobs. Pre-deposit order must also bear this in mind. Instead of directing the petitioner to pre-deposit Rs. 2 crores, the same is modified that the petitioner within four weeks from today will furnish bank guarantee of Rs. 50 lacs of a nationalised bank to the respondent. If such bank guarantee is furnished within time as directed, order of pre-deposit stands modified and consequently, if the appeal has been dismissed, that order is set aside and the appeal will stand restored to the file.
The Tribunal thereafter, to hear and dispose off the appeal on merits. Rule made absolute accordingly. No order as to costs.
2 As per Corrigendum dated 31-7-2009.