TMI Blog2011 (7) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2 Crores, which is less than 15 per cent of the tax and penalty demanded of nearly ₹ 14 Crores, cannot be said to be a patently illegal exercise of discretion by the CESTAT - Appeal is dismissed - Central Excise Appeal No. 105 of 2011 - - - Dated:- 27-7-2011 - V.V.S. Rao, Ramesh Ranganathan, JJ. G. Mohan Rao, Adv. for the Appellant/Petitioner/Plaintiff ORDER Ramesh Ranganathan, J:- 1. This appeal, under Section 35-G of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, is against the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Bangalore (CESTAT) in ST/Stay/771/2010 in ST/1337/2010 dated 14th February, 2011. 2. The Appellant, a public limited company engaged in the development of software, and providing IT services etc., is registered under the Finance Act, 1994 as a service provider of commercial training or coaching services. The Respondent issued Show Cause Notice dated 23rd October, 2008 demanding Rs. 6,91,96,898 as service tax towards various services allegedly rendered by the Appellant during the period 15* September, 2003 to 31st December, 2007. This amount included R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of eight weeks. 6. Thereafter, the Appellant submitted an application under Rule 41 of the CESTAT (Procedure) Rules, 1982 seeking further time to make payment of the pre-deposit, as directed by the CESTAT, of Rs. 2.00 Crores. They requested that Rs. 50.00 lacs paid by them be treated as part of the pre-deposit; Rs. 40.00 lacs paid by them as service tax during the impugned period be considered as part of the pre-deposit; and they be granted four months (16 weeks) for payment of the balance Rs. 1.10 Crores. 7. In its order dated 18th April, 2011, the CESTAT observed that they had carefully considered the submissions made by both sides, and had perused the miscellaneous application, the balance sheet, and the chartered accountant's certificate; and the Applicant was required to be given some time to deposit the balance amount. The miscellaneous application, seeking extension of time for pre-deposit of the balance amount, was allowed; extension of eight weeks was granted; and the Appellant was directed to report compliance on 17th June, 2011. The CESTAT observed that failure to comply with the terms of the stay order would result in dismissal of the appeal without furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007. Suffice to note that the CESTAT, in the order under challenge herein, has observed that the Appellant had not made out a prima facie case for complete waiver of the amount adjudged. 11. Before examining the contentions of Sri G. Mohan Rao, Learned Counsel for the Appellant, regarding the validity of the impugned order of CESTAT it is necessary to note that the law presumes that public authorities function properly and bona fide with due regard to public interest. This Court would be circumspect in granting interim orders of far-reaching dimensions or orders preventing collection of public revenue for No. better reason than that the parties had come to the Court alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are No. hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is also the question of public interest. (CCE v. Dunlop India Ltd., (1985) 1 SCC 260). 12. In matters relating to grant of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice. Imposition of conditions, to safeguard the interest of revenue, is an aspect which the CESTAT has to bring into focus. It is for the CESTAT to impose such conditions as are deemed proper to safeguard the interest of revenue. The CESTAT, while dealing with the application, has to consider the material placed by the Assessee relating to undue hardship, and should stipulate conditions required to safeguard the interest of revenue. (Benara Valves Ltd. (2006) 13 SCC 347; S. Vasudeva v. State of Karnataka AIR 1994 SC 923; Monotosh Saha v. Special Director, Enforcement Directorate (2008) 12 SCC 359). 14. The following principles should be kept in mind while considering the applications for stay or for dispensing with the requirement of pre-deposit under Section 35F of the Act: (1) Three aspects to be focused while dealing with the applications for dispensing of pre-deposit are:- (a) prima facie case, (b) balance of convenience, and (c) irreparable loss; (2) Interim orders ought not to be granted merely because a prima facie case has been shown; (3) The balance of convenience must be clearly in favour of making of an interim order and there should not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty levied would cause undue hardship to the Appellant, it does not mandate the CESTAT to waive pre-deposit in every case of undue hardship. As the CESTAT has also to consider protecting the interest of revenue, discretion exercised by CESTAT in granting partial waiver of deposit, and directing the Appellant to deposit less than 15 per cent of the total tax and penalty, would not justify interference by this Court. It is only if the exercise of discretion by CESTAT, substantially waiving the requirement of pre-deposit in the present case, is patently illegal would interfere by this Court, under Section 35-G of the Act, be justified. The order, requiring the Appellant to deposit Rs. 2 Crores, which is less than 15 per cent of the tax and penalty demanded of nearly Rs. 14 Crores, cannot be said to be a patently illegal exercise of discretion by the CESTAT. We are satisfied that the order of the CESTAT does not necessitate interference in an appeal filed by the Appellant herein under Section 35-G of the Act. The only relief which the Appellant is entitled to is for extension of time to deposit the said amount of Rs. 2.00 Crores. In case the Appellant deposits the said amount within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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