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Judgment
Rule returnable forthwith. Mr. Rao waives service.
Heard finally by consent of parties Perused petition.
This petition is directed against the order dated 14th December, 2009 [2010 (18) S.T.R. 269 (Tri. - Mumbai)] passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai. By the said order the Tribunal had directed the petitioner to pre-deposit Rs. 50,00,000/-, since the amount of penalty was imposed in the sum of Rs. 2.25 crores on the petitioner in exercise of powers u/s 78 of the Finance Act, 1994 by the Commissioner vide its order dated 3rd August, 2009 2010 (18) S.T.R. 267 . Subsequently, the petitioner filed modification application praying for reduction in the quantum of pre-deposit to the extent of 10% of the penalty. The prayer made by the petitioner for reducing the quantum of pre-deposit was not accepted for the reasons recorded in the order dated 7th September, 2009. However, the period for making pre-deposit was extended with direction to report compliance thereof.
Learned Senior Counsel appearing for the petitioner submits that no Service tax was payable because u/s 65(86b), the programme producer is liable to pay Service tax only if he reproduces the programme on behalf of another person. In his submission, perusal of the agreement involved in the case in hand clearly shows that the petitioner had produced the programme on its own account and not on account of any other person, as such, the petitioner was erroneously brought within the net of Service tax. According to the learned Senior Counsel, the Tribunal has not considered this aspect of the matter even though it was specifically raised in the appeal. It is, thus, prayed that on these grounds the impugned order is liable to be quashed and set aside.
Learned Senior Counsel further states that the petitioner had recovered the Service tax from its clients under the erroneous belief that they are required to pay Service tax. Provisions of the Act mandate them to pay the Service tax to the Department regardless of the fact whether or not the petitioner was liable to pay Service tax in view of Section 73A of the Finance Act, 1994. As such, the petitioner was advised not to challenge its liability to pay the Service tax. That is how they paid the Service tax together with interest.
Learned Senior Counsel further submits that in the facts and circumstances and considering the prima facie case made out by the petitioner, no penalty was imposable on them. The petitioner has also raised several other contentions in support of his prayer to demonstrate prima facie case for dispensing with the pre-deposit in toto.
Mr. Rao, appearing for the Revenue, tried to support the order but found it difficult to take it to its logical end. Ultimately, he left the issue to the discretion of this Court.
Having heard both the parties and having seen the number of contentions raised by the petitioner and considering the jurisdiction of this Court without interfering with the order, interest of justice would be served by substituting the condition of pre-deposit in cash with that of the Bank Guarantee. With this slight modification the petition needs to be allowed. Petitioner shall comply with the order of the Tribunal directing pre-deposit by furnishing Bank guarantee of any nationalized bank within a period of four weeks from today. The Bank guarantee to be kept alive till appeal is decided by the Tribunal and shall be subject to the result of the appeal.
Rule is made absolute in terms of this order with no order as to costs.