JUDGMENT In this writ petition the writ petitioner has challenged an order No. S-667/KOL/2012 dated 16th July, 2012 passed by the Customs Excise and Service Tax Appellate Tribunal, Kolkata, Eastern Zonal Branch (hereinafter referred to as 'the CESTAT) directing the petitioner to pre-deposit 25% of the Service Tax confirmed by the order under appeal within a period of eight weeks from the date of the said order and to report compliance on 10th September, 2012 failing which the appeal of the petitioner pending before the CESTAT being Appeal No. S.T. 282/09 would be dismissed. 2. The petitioner carries on business of execution of EPC/ Turnkey contracts. The contracts involves supply of plant, machinery and equipment on the one hand and construction, erection, installation, commissioning, design, engineering, transportation, port clearance etc. on the other hand. 3. According to the petitioner, the petitioner enters into separate agreements with its clients, one for supply of plant, machinery and equipment and the other for design, engineering, construction, erection and commissioning of the entire plant by using the said plant, machinery and equipment supplied" under the first agreement. 4. Although two agreements are usually executed, the scope of the work is planning, designing, engineering, construction, fabrication, supply, erection, trial run and commissioning of the plant, which consists of civil, structural, electrical and mechanical works with allied auxiliary facilities such as ventilation, air conditioning, dust extraction and suppression, fire fighting, drinking water supply etc. It appears that both the agreements contain cross fall breach clauses specifying that breach of anyone contract would constitute the breach of the other contract. 5. In course of business, the petitioner entered into four contracts two with Northern Coalfields Limited (hereinafter referred to as the ('NCL') one with South-Eastern Coalfields Limited (hereinafter referred to as the ('SECL') and one with Heavy Engineering Corporation Limited (hereinafter referred to as 'HECL'). 6. The first contract with NCL, concluded on 20th May, 2002, inter alia for design, engineering, civil and structural erection, pre-commissioning test, commissioning of Dudhichua Coal Handling Plant, Phase-II, including supply of equipment and accessories. Two separate agreements one for supply of equipment and accessories and the other for installation and related services of the value of Rs. 2,614 lakhs and Rs. 2,212.96 lakhs respectively. 7. Two separate agreements one for supply of equipment and accessories and the other for installation and related services of the value of Rs. 2,614 lakhs and Rs. 2,212.96 lakhs respectively. 7. The second contract also with NCL concluded on 28th November, 2005 was for planning, designing & engineering, construction, fabrication, supply, erection, trial run and commissioning of Coal Handling Plant at Nigahi Phase I (Package A) for civil, structural, electrical and mechanical works alongwith allied auxiliary facilities. In this case also two separate agreements in writing were executed, one for 'supply of equipment and accessories' and the other for installation and related services of the value of Rs. 5,853.65 lakhs and Rs. 5,643.31 lakhs respectively. 8. The third contract executed with South Eastern Coalfields Limited on 29th April, 2006 for planning, designing, construction, fabrication, supply, erection, trial run and commissioning of two numbers of Silos of 3200 tone capacity each with rapid wagon loading system of 5500 tonnes per hour and Belt Conveyor System of 2100 tonnes per hour rated capacity inclusive of all civil, structural, electrical and mechanical works and allied auxiliary facilities such as ventilation, dust extraction and dust suppression system, fire fighting system, drinking water supply system etc. on turnkey basis. Two agreements in writing were executed one for supply of equipment and accessories and the other for installation and other related services of the value of Rs. 4,600.65 lakhs and Rs.3,090.31 lakhs respectively. 9. The fourth contract was with Heavy Engineering Corporation Ltd, (hereinafter referred to as 'the HECL') executed on 31st May, 2006 was for planning, design, engineering, construction, fabrication, supply, erection, trial run and commissioning of Coal Handling Plant at Nigahi, Phase-II (Package-B) consisting of 1600 tonnes per hour rated capacity conveyor system, 3000 tonnes Silo with rapid wagon loading system of 5500 tonnes per hour, crushing complex comprising of gyratory crusher, all civil, structural, electrical and mechanical works alongwith allied auxiliary facilities such as ventilation, dust extraction and dust suppression system, fire fighting system, drinking water supply system etc. As usual, two separate contracts were executed one for supply of equipment and accessories and the other for works and services of Rs. 2272.41 lakhs and Rs. 5781.59 lakhs respectively. 10. As usual, two separate contracts were executed one for supply of equipment and accessories and the other for works and services of Rs. 2272.41 lakhs and Rs. 5781.59 lakhs respectively. 10. On or about 10th July, 2008, a show-cause notice was issued by the Additional Director General, DGCEI, Ahmedabad Zonal Unit, Ahmedabad, alleging that the petitioner had during the period from 1st July, 2003 to 20th September, 2007 wrongly availed the benefit of Notification No. 19/2003-ST dated 21st August, 2003 and Notification No.1/2006-ST dated 1st March, 2006, (hereinafter referred to as "said Notifications") and obtained abatement of 67% duty by not including the value of plant, machinery and equipment in computing the taxable value for calculation of the Service Tax payable. 11. In the show-cause notice it was alleged that the petitioner was not entitled to avail abatement of 67% in terms of the notifications and consequently liable to pay Service Tax on the entire amount received from its customers. 12. The petitioner was required show-cause why the Service Tax amounting to Rs.7,21,52,207/- (including Education Cess and Higher Education Cess) as detailed in Annexure 'A' of the show-cause notice, should not be demanded and recovered from it under the provisions of Section 73 of the Act by invoking the extended period of limitation as per the Proviso to Section 73(1) of the Act, alongwith interest thereon at the rate specified under Section 75 of the Act. 13. The petitioner was also required to show-cause why penalty under Sections 76, 77 and 78 of the Act should not be imposed upon the appellant for alleged contravention of the provisions of the Act and the Service Tax Rules, 1994 (hereinafter referred to as the 'said Rules'). 14. By a letter dated 25th September, 2008 the petitioner replied to the said show-cause notice denying the allegations made therein and inter alia contending that the proceedings initiated by the impugned show-cause notice, upon invocation of the extended period of limitation, was not sustainable in law. 15. 14. By a letter dated 25th September, 2008 the petitioner replied to the said show-cause notice denying the allegations made therein and inter alia contending that the proceedings initiated by the impugned show-cause notice, upon invocation of the extended period of limitation, was not sustainable in law. 15. The petitioner contended that even though the petitioner entered into two separate contracts, both the contracts were for composite job against a single notice notifying bid which made both the contracts in effect a single contract for a turnkey project and it was for that reason that both the contracts contained cross fall breach clause specifying that breach of anyone contract would also constitute the breach of the other contract. 16. The petitioner contended that the ECP Contract in the nature of turnkey projects including engineering, procurement and construction or commissioning was brought into the ambit of Service Tax with the amendment of the Finance Act, 1994 and incorporation of 'Works contracts' service with effect from 1st June, 2007. The services rendered by the petitioner did not constitute taxable service prior to 1st June, 2007 and was, therefore, not liable to Service Tax for any period prior to 1st June, 2007. 17. It was also argued that the activity of erection was not taxable service prior to 10th September, 2004 and was not liable to Service Tax prior to that date. The EPC contract between the petitioner and NCL in respect of Dudhichua Coal Handling Plant, Phase-II had been completed long before erection activity had been made taxable service. 18. It was also contended that of the total amount of Rs. 5,00,88,555/- received in respect of Dudhichua Coal Handling Plant, Phase II after 1st June, 2003, only Rs. 1,02,00,000/- was on account of commissioning and installation and the balance for construction activity for erection of plant which was not liable to Service Tax at the material time. 19. The petitioner further contended that in course of execution of the works and service contract involving construction, erection, installation, fabrication and commissioning of plant, the petitioner sold goods and material such as bricks, morrum, boulders, ballast, stone-chips, sand, cement flooring materials and tiles, reinforcement of TMT bars and other construction materials and finished production for which the petitioner paid value added tax under the West Bengal Value Added Tax Act, 2003. The petitioner claimed that the petitioner was entitled to examine of the value of taxable service as was equal to the value of goods and materials sold by the petitioner to the service recipient. 20. The petitioners contended that even if the supply and the service contracts were treated separately, Service Tax was payable after deduction of the value of materials and goods from the value of Taxable Service in terms of Notification No. 12/2003-ST dated 20th June, 2003. 21. The petitioner also contended that sub-contractors were liable to pay Service Tax for service to the main contractor prior to 23rd August, 2007 provided the main contractor had paid the Service Tax on the services rendered by him. It was argued that HECL was acting as the main contractor and the petitioner was acting as the sub-contractor in respect of contract of CHP-Nigahi Package B. 22. It was also contended that the petitioner had regularly filed ST 3 returns showing the particulars regarding taxable value realized, abatement claimed and Service Tax payable. Thus, it would be evident that the petitioner had never concealed any facts from the respondent authorities. Therefore, it could not be contended that there was wilful suppression or misrepresentation of facts on the part of the petitioner so as to invoke the extended period of limitation for issue of the show-cause notice. 23. By an order No. V(15) 12/ST-Adjn./Commr./09/22450 dated 14th September, 2009 the Commissioner Sales Tax, Kolkata confirmed demand of Service Tax amounting to Rs.7,07,02,615/-. Education Cess amounting to Rs. 13,48,416/- and Higher Education Cess amounting to Rs.1,01,177/- the total being Rs. 7,21,52,207/- against the petitioner alongwith interest in terms of Section 75 of the Finance Act, 1994. The Commissioner also imposed a penalty of Rs.7,21,52,207/- under Section 78 of the Finance Act, 1994 i.e. 100% of the aggregate of the Service Tax, Education Cess, and Higher Education Cess confirmed by the Order under appeal and further penalty of Rs. 5,000/- under Section 77 of the Finance Act, 1994. 24. Being aggrieved by the said order the petitioner has filed an appeal before the CESTAT being S.T. Appeal No. 282 of 2009. The petitioner also made an application for dispensation of the requirement to pre-deposit the tax, interest and penalty due and payable by the petitioner in terms of the order of the Commissioner under appeal. 24. Being aggrieved by the said order the petitioner has filed an appeal before the CESTAT being S.T. Appeal No. 282 of 2009. The petitioner also made an application for dispensation of the requirement to pre-deposit the tax, interest and penalty due and payable by the petitioner in terms of the order of the Commissioner under appeal. The said application has given rise to the order impugned in this writ application. 25. Section 86(1) of the Finance Act, 1994, as amended, provides that an assessee aggrieved by an order passed by a Commissioner of Central Excise under Section 73 or 83A or an order passed by a Commissioner of Central Excise (Appeals) under Section 85, may appeal to the Appellate to the CESTAT. 26. Sub-section (6) and (7) of Section 86 of the Finance Act, 1994 as amended are extracted hereinbelow for convenience :– "Sub-section (6) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, irrespective of the date of demand of service tax and interest or of levy of penalty in relation to which the appeal is made, be accompanied by a free of, – (a) where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates to five lakh rupees or less, one thousand rupees; (b) where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than five lakh rupees but not exceeding fifty lakh rupees, five thousand rupees; (c) where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than fifty lakh rupees, ten thousand rupees: PROVIDED that no fee shall be payable in the case of an appeal referred to in sub-section (2) or sub-section (2A) or a memorandum of cross-objections referred to in sub-section (4). (6A) Every application made before the Appellate Tribunal,– (a) in an appeal for grant of stay or for rectification of mistake or for any other purpose; or (b) for restoration of an appeal or an application, shall be accompanied by a fee of five hundred rupees : PROVIDED that no such fee shall be payable in the case of an application field by the Commissioner of Central Excise or Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, under this sub-section." "Sub-section (7) Subject to the provisions of this Chapter, in hearing the appeals and making orders under 'this section, the Appellate Tribunal shall exercise the same powers and follow the same procedure as it exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1944." 'Section 35F' of the Central Excise Act, 1944 provides as follows :– "35F. Deposit, pending appeal of duty demanded or penalty levied.–Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal 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 revenue. [Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filling.]" 27. Pending the appeal, an appellant is required to deposit with the adjudicating authority the duty demanded or the penalty levied. Pending the appeal, an appellant is required to deposit with the adjudicating authority the duty demanded or the penalty levied. However, in any particular case where the Appellate Authority is of the opinion that deposit of duty demanded or penalty levied would cause undue hardship to such person, the Appellate Authority might dispense with such deposit subject to such conditions as he might deemed fit to impose so as to safeguard the interest of revenue. 28. The Appellate Authority may dispense with pre-deposit subject to such conditions as he might deemed fit to impose as to safeguard the interest of the revenue. In Benaras Valves Ltd. v. Commissioner of Central Excise, 2006 reported in 2006 (204) E.L.T. 513 (S.C.) the Supreme court held as follows :– "8. It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful to the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens' faith in the impartiality of public administration, interim relief can be given. 9. It has become an unfortunate trend to casually dispose of stay application by referring to decisions in Siliguri Municipality and Dunlop India Cases (supra) without analyzing factual scenario involved in a particular case. 11. Two significant expressions used in the provisions are "undue hardship to such person" and "safeguard the interests of revenue". Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. 12. As noted above there are two important expressions in Section 35F. Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. 12. As noted above there are two important expressions in Section 35F. One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka and Ors. MANU/SC/0199/1994 : [1993] 2 SCR 715 that under Indian conditions expression "Undue hardship" is normally related to economic hardship. "Undue" which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. 13. For a hardship to be 'undue' it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. 14. The word "undue" adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. 15. The other aspect relates to imposition of condition to safeguard the interest of revenue. This is an aspect which the Tribunal has to bring into focus. It is for the Tribunal to impose such conditions as are deemed proper to safeguard the interest of revenue. Therefore, the Tribunal while dealing with the application has to consider materials to be placed by the assesses relating to undue hardship and also to stipulate condition as required to safeguard the interest of revenue." 29. The aforesaid view has been reiterated in Pennar Industries Ltd. v. State of Andhra Pradesh & Ors., reported in (2009) 3 SCC 177 , Ravi Gupta v. Commissioner of Sales Tax reported in 2009 (237) E.L.T. 3 (S.C.); Manotosh Saha v. Special Director, Enforcement Directorate reported in 2008 (229) E.L.T. 492 (S.C.); Indu Nissan Oxo Chemicals India Ltd. v. Union of India reported in 2008 (221) E.L.T. 7 (S.C.). 30. Compulsion to pay any unjust dues per se would cause hardship as held by the Supreme Court in B. M. Malani v. Commissioner of Income Tax reported in (2008) 306 ITR 196 (S.C.). 30. Compulsion to pay any unjust dues per se would cause hardship as held by the Supreme Court in B. M. Malani v. Commissioner of Income Tax reported in (2008) 306 ITR 196 (S.C.). 31. In Vijay Prakash Mehta v. Collector of Customs reported in 1989 (39) E.L.T. 178 (S.C.) the Supreme Court held that a right to appeal is a statutory right and considering Section 129E of the customs Act, there was discretion in the authority to dispense with the application of pre-deposit in case of undue hardship. 32. For considering whether an appellant is in undue hardship the financial position of the company may be a relevant factor. To ascertain the financial position of the company the balance-sheet of the company may be examined. At the same time, compulsion to deposit an amount that is ex facie not due and payable would must certainly result in undue hardship. 33. Moreover, as observed by the Division Bench of Bombay High Court comprising Ferdino I. Rebello and D.G. Karnik, JJ. in CEAT Ltd. v. Union of India reported in 2010 (250) E.L.T. 200 (Bom.) the Court cannot be oblivious of the state of economy and the need for companies to have sufficient liquidity to carryon business and/or industrial activity. Any burden by way of deposit of cash that is required to keep the business running and/ or for expansion of business activities has an adverse effect on productivity, employment and the like. 34. As held by Ruma Pal, J. in Bongaigao Refinery and Petrochem v. Collector of Central Excise (A), Cal, reported in 1994 (69) E.L.T. 193 undue hardship is not to be construed as financial hardship alone but covers prima facie strong case or even an arguable case in appeal. This Court was of the view that discretionary power must be exercised in favour of the assessee in the absence of goods reasons to the contrary. The aforesaid view was reiterated by this bench in Farmania Steel Works v. Union of India reported in 2011 (274) E.L.T. 331 (Cal.) 35. The impugned order which has been passed without considering the prima facie merits of the submissions of the petitioner cannot be sustained and the same is set aside and quashed. 36. The learned Tribunal shall decide the issue of dispensation of pre-deposit afresh in accordance with law and in the light of the observations made above. The impugned order which has been passed without considering the prima facie merits of the submissions of the petitioner cannot be sustained and the same is set aside and quashed. 36. The learned Tribunal shall decide the issue of dispensation of pre-deposit afresh in accordance with law and in the light of the observations made above. The Tribunal may, if it so chooses, proceed to decide the appeal on merits, notwithstanding the pendency of any request for dispensation of pre-deposit. 37. The petitioner is also restrained from transferring, selling and/or encumbering its properties or from operating its bank accounts, except in usual course of business, pending disposal by the learned Tribunal of the application of the petitioner. 38. The writ application is disposed of. Urgent Photostat certified copy of this judgment and/or order, if applied for, be supplied to the parties subject to compliance of all requisite formalities.