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2015 (12) TMI 1498 - MADRAS HIGH COURT

2015 (12) TMI 1498 - MADRAS HIGH COURT - 2016 (333) E.L.T. 278 (Mad.) , 2016 (42) S.T.R. 227 (Mad.) - Waiver of pre deposit - Section 35F - whether the amended provisions of Section 35F of the Central Excise Act, 1994, would be applicable or the unamended provisions of Section 35F of the Central Excise Act, 1994, would be applicale and what are the requirements to be fulfilled under the required provision - Overriding Commission - Held that:- As per the decision of the Hon 'ble Supreme Court, in .....

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essee has a better case on the issue of liability and perhaps carried away by this view, it did not raise the issue regarding the financial hardship. However, the Tribunal is expected to exercise its discretion, vested under the unamended provisions of Section 35F of the Act. In this case, there is a failure to exercise the discretion, as the Tribunal had lost sight of the provision applicable to the case, having regard to the date of filing of the appeal. When the Tribunal had failed to exercis .....

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Appeal No. 2769 of 2015, Miscellaneous Petition No.1 of 2015 - Dated:- 11-12-2015 - M. Jaichandren And S. Vimala, JJ. For the Appellant : Mr. S. Raghunathan For the Respondents : Mr. V. Sundareswaran, Sr. Panel Counsel JUDGMENT ( Judgment of the Court was delivered by S. Vimala, J. ) his Civil Miscellaneous Appeal has been filed by the appellant, as against the Miscellaneous Order No.41314 of 2015, dated 15.10.2015, passed by the first respondent. By this order, the appellant was directed to dep .....

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rline Corporation, Jeddah, (SSA). The Company is registered under the head 'Air Travel Agent Service'. The Service Tax Registration of the company is 'AAACA4912EST001'. 2.1. The appellant provides services in accordance with the terms and conditions enumerated in the General Sales Agent (GSA) Agreement. The appellant acts as a GSA for passenger air transport services, in the states of Tamil Nadu, Kerala (Cities of Cochin and Trivandrum) and for cargo sales in Tamil Nadu. For the .....

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t Memo, in Saudi Rials, and the net amount is stated in INR, by converting the amount, at the prevailing rate of exchange. 2.2. The Cargo Sales are made by IATA, Cargo Agents. For such sales, Saudia gives the Cargo Agents 5% commission on the freight amount, for the cargo and also incentive, as decided by Saudia from time to time. The appellant is entitled to ORC of 2.5% on cargo freight amount, which the appellant deducts from the net frieght received from it from the Cargo Agents and remits th .....

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s (Rule 3 (1) (iii) and 3 (2) of The Export Rules, 2005), and hence, the appellant is not liable to pay service tax. The further contention of the assessee was that, as there was no liability, the Revenue cannot demand any interest and penalty, as per Sections 75 to 77 of The Finance Act, 1994. 3.2. Rejecting the contention of the assessee, the Commissioner of Central Excise, directed the assessee to pay the service tax of ₹ 55,11,411/-. 3.3. The assessee preferred an appeal before the CES .....

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il Miscellaneous Appeal. 4. The main contention of the learned counsel for the appellant / assessee is that, the order of the Tribunal, directing pre-deposit, is not justified, when the services rendered by the appellant, both under passenger air transport ticket sales and the cargo sales would come within the purview of 'export of services', under which, no service tax is payable. 4.1. The specific contention of the learned counsel for the appellant is that, under Clause 105 of Section .....

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n liability itself and not on quantum, the order, directing pre-deposit of ₹ 20,00,000/-, by the first respondent herein, is against law and therefore, it is not sustainable. 4.2. The learned counsel for the respondents contended that the order directing pre-deposit of ₹ 20,00,000/- is perfectly justified, as it is mandatory under the amended provisions of Section 35F of The Central Excise Act, 1994 (hereinafter will be referred to as the Act ). 4.3. The first question to be consider .....

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be applicable or the unamended provisions of Section 35F of the Central Excise Act, 1994, would be applicale and what are the requirements to be fulfilled under the required provision. 4.6. The amended Section 35F of the Act prescribes mandatory pre-deposit of 7.5% or 10% for first stage or second stage appeal, of duty demanded, where duty demanded is in dispute or where the duty demanded and penalty leveied are in dispute and where penalty alone is in dispute, the pre-deposit shall be calculate .....

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o be prospective, unless and until, the same has been made retrospective by the express provision in the amendment itself. A perusal of the amended Section, i.e., Section 35F of the Act, only indicates the cut-off date, i.e., 06.08.2014, on or after which pre-deposit is made mandatory to entertain the appeal. But, it is silent with regard to the law applicable to the appeal filed prior to 06.08.2014. The pre-existing right of the appeal cannot be destroyed by the amendment and the right to appea .....

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re with or fetter, if not to impair or imperil, the substantive right. The right that the amended section gives a certainly less than the right which was available before. A provision which is calculated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. Indeed the new requirement cannot be said merely to regulate the exercise of the appellant s pre-existing right but in truth whittles down the right itself and cannot be regarded as a .....

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ile provision of law, would not be affected by the provisions introduced by the amendment of 2014. 4.9. As per the decision of the Hon 'ble Supreme Court, in the case of Garkapati Veeraya v. N.Subbaiah Choudhry and others (AIR 1957 SC 540), the right of appeal 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. 4.10. Thus, it is clear that the law appl .....

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peal, deposit with the adjudicating authority the duty demanded or the penalty levied : Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of re .....

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ithout considering, (a) the prima facie case, with regard to merits and also (b) with regard to financial difficulties of the assessee. The essential portion of the order reads as under:- .... While appellant says that overriding commission shall not be taxable, Revenue holds otherwise. 2. Without expressing any opinion that this stage as to whether the receipt was in relation to the service provided, it is left open to both sides to argue in course of appeal hearing. 3. Appellant is directed to .....

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ppellate authority has considered the prima facie case of the appellant nor has enquired the financial position of the appellant. No doubt, the assessee had neither pleaded nor placed materials to show that there is undue financial hardship for it. The learned counsel for the appellant would submit that, by mistake, the assessee failed to put forth its contention regarding the financial hardship and that the assessee must be permitted to raise this contention, as it is armed with materials to su .....

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