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Madhya Pradesh High Court · body

2010 DIGILAW 1092 (MP)

Sayaji Hotels Ltd. v. Union of India

2010-10-26

S.K.SETH, SHANTANU KEMKAR

body2010
ORDER Shantanu Kemkar, J. 1. With consent heard finally. 2. Petitioner claims to be a Company engaged in the business of running hotel in Indore. According to the Petitioner, it provides various services to its guests including rooms, restaurants, health club, swimming pool, taxi service, banquet hall etc. It is the case of the Petitioner that for services relating to banquet hall which it provides for its guests it is registered as 'Mandap Keeper' as defined under the Service Tax Act. It has been stated that it provides food and beverages during the functions organized in the banquet hall. 3. It is the case of the Petitioner that for supply of food and beverages it was paying Sales Tax (VAT) as was applicable. From March 2005 the Petitioner was paying service tax on the gross amount charged from the guests under the 'Mandap Keeper Service' excluding the value of food and beverages sold by it in terms of Notification No. 12/2003 -S.T., dated 20-6-2003. Thus, the Petitioner claims that it was collecting and paying service tax on the full amount of service charges, tent house charges, decoration charges, stage charges on the amount charged from the guest. 4. The Petitioner's returns under Form ST-3 regarding payment of Service Tax were considered by the fourth Respondent Commissioner Central Excise. The Commissioner observing that the Petitioner had provided service of 'Mandap Keeper' with catering but had not paid the Service Tax on gross amount received after claiming abatement as per Notification No. 1/2006, dated 1-3-2006, issued a show cause notice dated 15-10-2009 (Annexure P-5) to the Petitioner asking the Petitioner why (i) the benefit of Notification dated 20-6-2003 should not be denied to it for availment of exemption (ii) the service tax to the extent of Rs. 1,29,44,543/- should not be demanded and recovered as service tax liability under proviso to Section 73 of the Chapter V. of the Finance Act, 1994, (iii) the interest be not levied, under Section 75 and (iv) why penalty should not be imposed upon it under Section 76 and 78 of the Finance Act. 5. The Petitioner submitted its reply to the said show cause notice on 6-12-2009 (Annexure P-6). 5. The Petitioner submitted its reply to the said show cause notice on 6-12-2009 (Annexure P-6). It was the case of the Petitioner in reply that the Petitioner is entitled for the benefit of notification No. 12/2003 dated 20-6-2003 and that the supply of food and beverages in the banquet hall which is liable to Sales Tax (VAT) cannot be subjected to Service Tax. 6. The Commissioner after giving opportunity of hearing to the Petitioner, vide order dated 8-1-2010 rejected the plea of the Petitioner and held the Petitioner to be not entitled to get the benefit of the said notification dated 20-6-2003. Accordingly, the fourth Respondent demanded Service Tax from the Petitioner amounting to Rs. 1,29,44,543/- with interest at the rate applicable and also with penalty of Rs. 200/- per day or 2% of service tax per month. 7. Aggrieved by the aforesaid order dated 8-1-2010 passed by the fourth Respondent Commissioner of Central Excise, the Petitioner filed a statutory appeal (Annexure P-8) under Section 35F of the Central Excise Act, 1944 on 9-4-2010 along with an application for stay before the second Respondent Customs, Excise and Service Tax Appellate Tribunal, (for short the Tribunal) New Delhi. The Tribunal after considering the Petitioner's prayer for stay and waiver to deposit the amount, vide impugned order (Annexure P-l) dated 27-9-2010 [ 2010 (20) S.T.R. 485 (Tri. - Del.)] rejected the Petitioner's prayer for total waiver of the pre-deposit and directed the Petitioner to deposit Rs. 60,00,000/- out of the total demand within four weeks. Aggrieved the Petitioner has filed this writ petition. 8. The contention of the learned Counsel for the Petitioner is that the Tribunal has committed error in not maintaining consistency an uniformity in approach in deciding the Petitioner's prayer for waiver. He submitted that though in the interlocutory orders the principles of binding precedence does not apply but while considering and passing the orders on the prayer for interim relief need for consistency in approach and uniformity in exercise of judicial discretion was required to be maintained by the Tribunal. He pointed out that on earlier two occasions in the case of the Petitioner itself relating to the earlier assessment years involving identical question, the Tribunal had granted total waiver for entertaining it appeals bearing no's. Service tax Appeal No. 374/2008 and Service Tax Appeal No. 399/2009. He pointed out that on earlier two occasions in the case of the Petitioner itself relating to the earlier assessment years involving identical question, the Tribunal had granted total waiver for entertaining it appeals bearing no's. Service tax Appeal No. 374/2008 and Service Tax Appeal No. 399/2009. In the circumstances, according to him in view of the law laid down by the Supreme Court in the case of Vishnu Traders v. State of Haryana and Ors. 1995 Supp (1) SCC 461 and in view of the judgment passed by a Division Bench of Bombay High Court in the case of Wardha Coal Transport Pvt. Ltd. v. Union of India 2009 (13) S.T.R. 490 (Bom.) the Tribunal should have a taken a consistent view and should have granted total waiver. He further submitted that there was no change in the circumstances after passing earlier two orders of complete waiver and, therefore, the Petitioner should have been granted dispensation with such deposit in order to maintain the parity. In order to support his contention that the Petitioner would suffer undue hardship and that it has prima facie case as the demand raised has not leg to stand he placed reliance on the judgment of the Supreme Court in the case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes 2008 (9) S.T.R. 337 (S.C). 9. On the other hand learned Senior Standing counsel of Union of India appearing for the Respondent argued that in the absence of undue hardship being established by the Petitioner the order passed by the Tribunal cannot be said to be illegal warranting interference by this Court in this petition under Article 226/ of the Constitution of India. 10. Having heard learned Counsel for the parties and after perusal of the impugned order and the earlier two interim orders passed by the Tribunal in the Petitioner's own case we find that on earlier occasions when the said two appeals were filed by the Petitioner raising the identical question, the Tribunal after considering the prayer for waiver has granted total waiver from deposit. However, in the present case while considering the prayer the Tribunal in Paragraph 7 of the impugned order has observed that the Appellant has come before the Tribunal for the third time to seek waiver of pre-deposit on the same plea that no service tax shall be levied if Sales Tax or VAT is paid. However, in the present case while considering the prayer the Tribunal in Paragraph 7 of the impugned order has observed that the Appellant has come before the Tribunal for the third time to seek waiver of pre-deposit on the same plea that no service tax shall be levied if Sales Tax or VAT is paid. Nearly two years are going to expire from the date of passing of the order firstly on 6-8-2008 in Appeal Case No. 374/2008 and one year was going to expire from status qua ante order passed by us on 30-7-2009 in Appeal No. 399/2009 following first order and appeal is not reaching for hearing". Observing thus the Tribunal rejected the Petitioner's prayer for complete waiver. On going through the entire order we find that there is no finding recorded by the Tribunal that after obtaining the said orders of complete waiver the Petitioner is delaying the hearing of the said appeals. In the circumstances, if the earlier appeals filed are not being heard by the Tribunal and the Petitioner has been required to file an appeal for the subsequent years assessment the Petitioner cannot be made responsible and cannot be denied the similar benefits which were earlier granted to it in the earlier two appeals involving same question. In our considered view in the absence of change in the circumstances, the Tribunal should have maintained the consistency and uniformity while exercising the judicial discretion and should not have taken a different view than the view it had already taken in the Petitioner's two appeals involving identical issue that too by assigning the reasons that the earlier two appeals are pending since last two and one year. We find that the course adopted by the Tribunal is contrary to the law laid down by the Supreme Court in the case of Vishnu Traders v. State of Haryana and Ors. (supra) in which the Supreme Court has observed thus: In the matters of interlocutory orders, principle of binding precedents cannot be said to apply. However, the need for consistency of approach and uniformity in the exercise of judicial discretion respecting similar causes and the desirability to eliminate occasions for grievances of discriminatory treatment requires that all similar matters should receive similar treatment except where factual differences require a different treatment so that there is assurance of consistency, uniformity, predictability and certainty of judicial approach. However, the need for consistency of approach and uniformity in the exercise of judicial discretion respecting similar causes and the desirability to eliminate occasions for grievances of discriminatory treatment requires that all similar matters should receive similar treatment except where factual differences require a different treatment so that there is assurance of consistency, uniformity, predictability and certainty of judicial approach. In the case of Wardha Coal Transport Pvt. Ltd. (supra) a Division Bench of Bombay High Court has observed that once the Tribunal has granted full waiver at least in two similarly situated cases, it would not be proper for it to take a different view and deny full waiver of pre-deposit. 11. Having regard to the aforesaid, in our view the Tribunal has committed gross illegality in not maintaining uniformity and consistency in exercise of its judicial discretion. The reason assigned by the Tribunal for not granting complete waiver in the appeal filed by the Petitioner in the third year's challenge to the assessment being wholly unsustainable, the impugned order (Annexure P-l) deserves to be and is hereby quashed to the extent of imposition of the condition of pre-deposit of Rs. 60,00,000/-. 12. The Tribunal is directed to deicide the Petitioner's appeal on merits without insisting on pre-deposit. We record the statement of the learned Counsel for the Petitioner that the Petitioner is ready and willing to get it all the aforesaid three appeals decided as expeditiously as possible. In order to avoid undue delay we direct the Tribunal to decide all the aforesaid appeals of the Petitioner finally within a period of 8 weeks from the date of receipt of copy this order. The Petitioner shall cooperate in disposal of its appeals within the time fixed. 13. In view of the aforesaid discussion and observations made hereinabove, the petition stands disposed of. No orders as to the costs. 14. CC within three days.