MOHABIR ENTERPRISES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) Heard Mr. M. N. Bharathi, learned counsel for the petitioner and Mr. M. Santhanaraman, learned Senior Central Government Standing Counsel appearing for the respondents. The order passed by the first respondent-appellate authority in Pre-Deposit-cum-Appeal Order No. 62/2013 (M-ST(PD)) (in A. No. 366/2012 (M-ST)), dated January 22, 2013, whereby and whereunder, the authority has decided that for taking up the appeal, the pre-condition for depositing the entire amount of Rs. 47,93,469 towards service tax, with interest, penalty, etc., had been reduced to Rs. 4 lakhs under section 35F of the Central Excise Act, 1944 (hereinafter referred to as, "the Act") made applicable to the service tax as per section 83 of the Finance Act, 1994 and the balance amount was waived, is called in question, seeking to quash the same as unlawful, arbitrary and not sustainable in law.

(2.) According to the petitioner-company, the officers attached to the second respondent called for certain details relating to the activities of the petitioner with one M/s. Shiv-Vani Oil and Exploration Services Limited, New Delhi and M/s. Max-Tech Oil and Gas Services Private Limited, New Delhi, for providing short hole drilling and 3D seismic job services. The petitioner engages labourers to drill the land up to a depth stipulated by the clients, which is performed manually by unskilled labourers hired by the petitioner from time to time and the petitioner informed the Department that they are only sub-contractors and as per the agreement, the petitioner is precluded from charging/collecting service tax, as the main contractors remit service tax on the services provided by them to the ultimate client. The petitioner relies upon the trade notices issued and the clarification issued by the Central Board of Excise and Customs (CBEC) to the effect that sub-contractors are not liable to remit service tax when the same is remitted by the main contractors. The petitioner contested the classification and taxability of the impugned services under the category "survey and exploration of mineral services" as defined' under section 65(104a) of the Finance Act, 1994.

(3.) While so, it is the case of the petitioner that a show-cause notice in No. 608/2009, dated November 30, 2009 was issued by the second respondent to the petitioner, requiring the petitioner to show cause as to why a sum of Rs. 47,93,649 towards service tax, should not be demanded under section 73(1) of the Finance Act, 1994, apart from demand of interest. However, the petitioner filed reply, dated January 19, 2010 to the adjudicating authority, and the adjudication proceedings were transferred to the third respondent in terms of Notification No. 6/2009, Service Tax, dated January 30, 2009 issued by the Chief Commissioner of Central Excise, Chennai Zone. The counsel for the petitioner appeared before the then adjudicating authority on March 14, 2011 and made submissions and the successor-adjudicating authority fixed hearing on January 27, 2012, and the counsel for the petitioner, vide letter dated January 29, 2012 informed his inability to attend the hearing due to other pre-occupation. The third respondent then fixed the hearing on February 27, 2012, on which date, the counsel for the petitioner appeared before the authority and the third respondent passed the order in Order-in-Original No. 20/2012, dated February 29, 2012, levying service tax of Rs. 47,93,469, with interest, penalty, etc., against which, the petitioner filed a statutory appeal under section 85 of the Finance Act, 1994, before the first respondent-appellate authority, along with petition for stay/waiver of pre-deposit of service tax, interest and penalty and the said appeal was numbered as A. No. 366/2012(MST). The first respondent passed the impugned order, dated January 22, 2013, in Pre-Deposit-cum-Appeal Order No. 62/2013 (M-ST(PD)) (in A. No. 366/2012 (M-ST)), thereby directing the petitioner to pay the amount of Rs. 4 lakhs as pre-deposit in cash on or before February 12, 2013 under section 35F of the Act, made applicable to service tax as per section 83 of the Finance Act and the balance amount was waived. Challenging the said order dated January 22, 2013, the petitioner has filed this writ petition.