TMI Blog2013 (4) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... nded as pre-deposit within a period of eight weeks from the date of receipt of copy of this order - The Civil Miscellaneous Appeal is disposed of accordingly - Consequently, the connected M.P. is closed. - C. M. A. No.907 of 2013, M. P. No. 1 of 2013 - - - Dated:- 3-4-2013 - R. Banumathi And K. Ravichandrabaabu,JJ. For the Appellant : Mr. Md. Shaffiq For the Respondent : Mr. V. Sundareswaran JUDGMENT The above appeal is filed by the assessee against the Miscellaneous Order passed by the CESTAT whereby the appellant was directed to make pre-deposit of 50% of the tax amount. 2. The short facts, as projected by the appellant, are as follows:- The appellant is a company engaged in the trading of computer parts and peripherals. They have entered into a contract with a multi national company viz., Hewlett Packard (HP) for sale of computer parts and accessories. The said MNC (HP) had also entered into a contract with another company viz., Redington India for rendition of warranty/after sales service. As far as the contract entered into with the MNC (HP) is concerned, there is an obligation on the part of the appellant to sell the spares, components and accessor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premise that the value of the goods has been excluded while levying service tax suffers from non-application of mind inasmuch as the Adjudicating authority has proceeded tol evy tax on the entire consideration/receipt from the customer and no deduction is given in respect of the value of the goods sold if the value of the goods sold were deducted then there can be no levy of service tax inasmuch as the entire consideration/receipt from the customer has been treated as value of goods sold and subject to sales tax/ VAT? 3. Whether the Tribunal ought to have seen that the adjudicating authority has erred in denying the appellants the benefit of Notification No.12 of 2003 which excludes the value of goods sold from levy of service tax on the erroneous premise that the appellants charge their customers a fixed sum and does not fix the value of the goods sold completely overlooking the fact that the fixed sum constitutes the value of goods sold and Section 9 of Sale of Goods Act leaves the manner of fixing the price to the discretion of the contracting parties ? 4. Whether the order of the Tribunal inasmuch as it has not even considered nor rendered any finding on the existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us not liable to service tax . He further submitted that the appellant had incurred a loss of ₹ 6.53 lakhs for the year ended March 31st, 2012 and under such circumstances the impugned order of the Tribunal directing the appellant to make a pre-deposit of 50% of the tax demanded would result in the appeal becoming illusory. 9. In support of his submissions, the learned counsel appearing for the appellant relied on the decisions in Indian Railway Construction Co., Ltd., Vs. Ajay Kumar (2003) (4) SCC 579; Omar Salay Mohd. Sait V. Commissioner of Income Tax (AIR 1959 (SC) 1238; Bharat Sanchar Nigam Ltd., Vs. Union of India (2006 (3) SCC 1) ; Imagic Creative (P) Ltd., Vs. Commissioner of Commercial TAxes (2008 (2) SCC 614). 10. Per contra, the learned Senior Central Government Standing Counsel appearing for the Revenue submitted that under Section 35F of the Central Excise Act 1944, the payment of deposit is mandatory and the order of the Tribunal directing the appellant to make pre-deposit of 50% of the tax demanded is perfectly in accordance with Section 35F and the provision made therein. He also submitted that the Tribunal only after specifically finding that the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consideration of all the facts and circumstances of the case with which we are not called upon at this stage to express any view on merits. What is now urged before us is against the pre-deposit order passed by the Tribunal. 15. Before considering the correctness or otherwise of the order passed by the Tribunal, let us consider the scope of Section 35F of the Central Excise Act. Section 35F of the Central Excise Act contemplates deposit of the duty demanded or the penalty levied pending the appeal filed before the Commissioner (Appeals) or the Appellate Tribunal. The word shall appearing under Section 35F makes it clear that such pre-deposit is mandatory. However, the first proviso to Section 35F grants a discretionary power to the appellate authorities to dispense with such deposit subject to such conditions so as to safeguard the interest of the Revenue, if in its opinion, the deposit of duty demanded or penalty levied would cause undue hardship to the appellant. 16. It is pertinent to note at this juncture that only a discretion is vested on the appellate authorities as it is apparent from the word may appearing in the first proviso. Thus, a overall reading of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 923) 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. 13. For a hardship to be 'undue', it must be shown that the particular burden to have 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. 14. The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. 15. The other aspect relates to imposition of condition to safeguard the realisation of penalty. 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 realisation of penalty. 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 safeguar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 17.7.2012 has been confirmed by the Apex Court by dismissing SLA (Civil) No. 24321 of 2012 on 27.8.2012. 25. Going by all these decisions, what emerges is that the appellant is not only required to plead undue hardship but also to establish the same before the Tribunal. We have already pointed out that the liability of the appellant to pay the Service tax has to be decided only in the main appeal before the Tribunal. 26. No doubt the appellant had raised several grounds on merits in the appeal before the Tribunal. Certainly, the Tribunal would consider all those grounds at the time of hearing the main appeal. Therefore, the only question that has to be seen here is as to whether the appellant had established the plea of undue hardship before the Tribunal. When we see the application filed before the Tribunal seeking for waiver of pre-deposit, it is stated by the appellant in the affidavit filed before the Tribunal that the petitioners would be put to irreparable loss and undue hardship, if the original order is not stayed. It is also stated that the petitioners would be exposed to a too serious financial difficulty as the amount involved is huge on the one hand and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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