Mahindra Ashtech Limited v. Union of India

Mr. Vidhyadhar S. Apte with Mr. Ajay Ashok Joshi for the Petitioner Mr. Ajay Kantharia with Mr. Jitendra B. Mishra for the Respondent. CORAM : DR. D.Y. CHANDRACHUD AND A.A. SAYED, JJ. DATE : 21 SEPTEMBER, 2011. P.C.

Rule, returnable forthwith. By consent of the parties taken up for final hearing.

This petition is directed against an order of the Commissioner (Appeals) Central Excise, Pune dated 10 August 2011 on an application for stay under Section 35F of the Central Excise Act 1944.

On the primary issue as regards the payment of service tax on the 2 wpl1870.11.sxw activities of erection, commissioning and installation service, the Commissioner (Appeals) decided the issue by his order dated 26 February 2010 but remanded the matter for reexamining the computation of the service tax on the basis of relevant documents to be furnished by the Petitioner. This aspect has been referred to in para 11 of the impugned order. Counsel appearing on behalf of the Petitioner also submits that the only issue which the Petitioner now seeks to raise is as regards the computation of the service tax due and payable.

The Commissioner (Appeals) has directed the Petitioner to deposit an amount of Rs. 45 lakhs within four weeks from the receipt of the order on the basis that the total amount due and payable is Rs.92,71,776/- (inclusive of demand of service tax and penalty). The grievance of the Petitioner is that though in paragraph 12 of the order, the Commissioner (Appeals) prima facie found the contention of the Petitioner that for a certain period the service tax was calculated at a higher rate to be plausible, yet, that has not been taken note of in arriving at the actual computation for the purpose of deciding the application for stay.

Having heard Counsel for the Petitioner and Counsel for the Revenue, we are of the view, that there is substance in the submission which has been 3 wpl1870.11.sxw urged, for the reasons which we will now indicate and hence a modification of the order of stay is warranted in the exercise of our jurisdiction under Article 226 of the Constitution. Paragraph 12 of the impugned order of the Commissioner (Appeal) reads as follows: "Therefore, in view of the above facts, I find that the appellants do not have a prima facie case in their favour. Further I find that the appellants themselves, have submitted that even if Service Tax is leviable, it should be Rs. 31,72,643/-. I find that the appellants have calculated the Service Tax amount after claiming certain abatements. I only find merit in appellants' contention that for a certain period the Service Tax has been calculated at a higher rate; and that the Service tax has been calculated on the total amount received by the appellants and hence the appellants' contention that the amounts received should be considered as cum duty price, appear to be acceptable. " Prima facie without going into the merits of the controversy finally at this stage, it is sufficient to observe that the Commissioner (Appeals) has found some substance in the grievance of the Petitioner in regard to the actual computation, yet, prima facie that does not find reflection in the actual computation which was carried out, in paragraph 14 of the order. In that view of the matter, we are of the view that it would be necessary to modify the order of deposit by reducing the quantum of deposit from Rs. 45 lakhs to Rs. 35 lakhs. The Petitioner shall make a pre-deposit of the aforesaid 4 wpl1870.11.sxw amount of Rs. 35 lakhs in terms of the provisions of Section 35F of the Central Excise Act, 1944 within a period of two weeks from today. The impugned order of the Commissioner (Appeals) dated 10 August 2011 stands modified in the aforesaid terms. Rule absolute in these terms. No order as to costs. ( A.A. SAYED, J. )

(DR. D.Y.CHANDRACHUD, J.)