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Fifth Avenue Sourcing (P) Ltd. Versus Commissioner of Service Tax

Waiver of pre deposit - Mandatory pre deposit of 7.5% - Provision of section 35F, whether prospective or retrospective - date of SCN 05.06.2013 - Date of OIO 27.02.2015 - amendment has come into effect from 06.08.2014 - Held that:- the assessee's right to file an appeal and a further appeal under the earlier Act is a vested right and such a right becomes vested in the assessee, the moment he filed his return which commenced the assessment proceedings. - Decision in the case of The Deputy Commerc .....

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ion No.12546 of 2015 and M.P.No.1 of 2015 - Dated:- 12-6-2015 - The Honourable Mr.Justice T. Raja,J. For the Petitioner : Mr. Joseph Prabakar For the Respondent : Mr. V. Sundareswaran ORDER This Writ Petition has been directed against the impugned Order-in-Original No. C. No. IV/9/26/2013-STCAdj dated 27.02.2015 passed by the Commissioner of Service Taxes I, Chennai, on various grounds. 2. Mr. Joseph Prabakar, learned counsel appearing for the petitioner would submit that the petitioner being en .....

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nufacturers, the Letter of Credit would be transferred to the respective vendors/manufacturers, after retaining the margin of the petitioner. Once the shipment of the goods was effected, the documents from the vendors would reach the petitioner bank through the vendor's bank and only thereafter, the petitioner would substitute their invoice and bills of exchange permissible as per UCP and then the documents were sent to the buyers situated abroad. Upon receipt of the payment, the petitioner& .....

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r Section 65(19) of the Finance Act. 3. The learned counsel appearing for the petitioner would further submit that the petitioner received a notice for Statement of Demand No.193/2013 dated 05.06.2013 for the period October 2011 to September 2012 to show cause as to why service tax of ₹ 1,74,04,550/- for the period commencing from October 2011 to September 2012 should not be demanded along with interest and penalty. In response to the said notice, the petitioner submitted a detailed reply .....

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ction, inasmuch as it goes beyond the scope of show cause notice. Adding further, he would submit that although the petitioner has got merits in the matter, he is prepared to go back to the appellate authority to file the appeal against the impugned order, however, in the mean while, various High Courts have decided the filing of the appeal without making pre-deposit as the amendment has come into effect from 06.08.2014 with reference to Section 35(F) of the Act. 5. The learned counsel for the p .....

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of the waiver application by the Tribunal. In support of his submission, he has relied upon the following judgments of Kerala High Court (i) M/s.Muthoot Finance Ltd., ..vs.. Union of India and another reported in 2015-TIOL-632-HC-Kerala-ST. (ii) Secretary to Government Department of Agriculture, Government of Kerala and another ..vs.. Union of India and another reported in 2015 TIOL 895 HC Kerala ST. and on this basis, he sought for a direction to enable the petitioner to file appeal without ma .....

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not be accepted since neither the Hon'ble High Court of Kerala nor the Andhra Pradesh High Court has dealt with the second proviso to Section 35(F) of the Act. In support of his submission, after referring to the entire proviso including second proviso to Section 35(F), he has also placed on record the judgment of the Kerala High Court in K.V.Raghunathan Pillai ..vs.. The Commissioner of Central Excise, Customs and Service Tax, Thiruvananthapuram to impress upon this Court that reading of se .....

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y the learned counsel appearing for the respondent, it is necessary to extract Section 35(F) of the Finance Act, 2014, which is as follows:- 35F. The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal- (i) under sub-section (1) of Section 35, unless the appellant has deposited seven and a half per cent of the duty, in case where duty or duty and penalty are in dispute or penalty, where such penalty is in dispute, in pursuance of a decision or an order pass .....

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Section 35B, unless the appellant has deposited ten per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; Provided that the amount required to be deposited under this section shall not exceed rupees ten crores; Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the comme .....

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ly to stay applications and appeals pending before the appellate authority prior to the commencement of the Finance Act (2 of 2014). In the present case, as contended by the learned counsel appearing for the respondent to apply the second proviso in order to deny the benefit of filing the appeal without making the payment of 7.5% before the CESTAT, it should be mentioned that the petitioner as against the Order-in-Original passed by the respondent on 27.02.2015, till date has not filed any appea .....

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point that arises for consideration is whether the petitioner would have to deposit the amount of 7.5% of the tax confirmed against him, as a condition for pursuing the appellate remedy before the Tribunal. I note in this connection that recently, a Division Bench of the High Court of Telengana & Andhra Pradesh has taken a prima facie view that, inasmuch as the lis in question had commenced prior to the introduction of the amendment to the Finance Act, 1994, with effect from August 2014, th .....

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the rest of the career of the suit and, further, that the right of appeal that is vested is to be governed by the law prevailing at the date of institution of the suit or proceeding, and not by the law that prevails at the date of its decision or at the date of filing of the appeal. (See: Garikapati Veeraya v. N.Subbiah Choudhry and other (AIR 1957 SC 540); Messrs Hoosein Kasam Dada (India) Ltd., v. The State of Madhya Pradesh and others, (AIR 1953 SC 221; Vitthalbhai Naranbhai Patel v. Commiss .....

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or recovery of the amounts confirmed against him by Ext.P8 order. At the time of filing the appeal, he will not be required to make any payment as a pre-condition for the hearing of the waiver application by the Tribunal. I, therefore, relegate the petitioner to the alternate remedy available under the Finance Act, 1994, as amended, of approaching the Appellate Tribunal by way of an appeal against Ext.P8 order. It is made clear that the appeal to be filed by the petitioner would be governed by .....

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08.2014, then the Appellate Tribunal shall number the Appeal, and consider the application filed by the petitioner for waiver of pre-deposit and stay of recovery of the amounts confirmed against him by Ext.P8 order, on merits and thereafter, proceed to hear the appeal itself in due course. The petitioner shall file the appeal, together with the application for waiver of pre-deposit and stay, before the Appellate Tribunal on or before 31.03.2015. 10. The above view has been followed in a subseque .....

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a pre-condition for maintaining the appeal before the CESTAT. I note, in this connection, that this Court has taken a view that, in cases where the commencement of the lis is prior to the coming into force of the amendment dated 16.08.2014, the appeal to be filed by the assessee would be governed by the provisions of the Finance Act, 1994, as is stood prior to its amendment by the amendment dated 16.08.2014. Following the said view in the instant case, I make it clear that, if the petitioner pr .....

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ear the appeal itself on merits. To enable the petitioner to do so, I stay further proceedings for recovery of the amounts confirmed against the petitioner by Ext.P7 order, for a period of one month, making it clear that on expiry of the period of one month, the stay granted by this judgment will cease to operate. 11. After that, the Hon'ble High Court of Andhra Pradesh also in M/s.K.Rama Mohana Rao & Co. ..vs.. Union of India, Ministry of Finance, New Delhi and 4 others reported in 2015 .....

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gs were initiated with the issuance of show cause notice prior to the amendment. 12. In yet another reported decision in 2006 (147) STC 218 (Mad) (Deputy Commercial Tax Officer, Tirupur Central I Assessment Circle, Tirupur and others ..vs.. Cameo Exports and others), the Hon'ble Division Bench of this High Court, while answering the question as to when such a pre-existing right of appeal becomes vested in a party- Is it on the date of filing of the returns ? Or is it on the date when a pre-a .....

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ficer, Tirupur Central I Assessment Circle, Tirupur and others ..vs.. Cameo Exports and others mentioned supra. The assessees therein filed Appeals before the Assistant Commissioner under Section 31 of the Tamil Nadu General Sales Tax Act, 1959, against the orders of assessment, but the Appeals were rejected by the appellate authority on the ground that they were not accompanied by the proof of payment of 25% of the disputed tax as per proviso 2 to Section 31 of the Act as amended by Act 19 of 2 .....

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