DIESEL LOCO MODERNIZATION WORKS Vs. REGISTRAR

JUDGEMENT

(1.) This order shall dispose of CWP Nos. 14643 and 14718 of 2012 as learned counsel for the petitioner states that the facts and the issue involved in both the petitions are identical. However, facts have been extracted from CWP No. 14718 of 2012. Prayer in CWP No. 14718 of 2012 filed under articles 226/227 of the Constitution of India is for quashing the order dated May 4, 2012, annexure P5 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (in short, "the Tribunal") whereby the petitioner has been required to deposit entire service tax demand of Rs. 3,28,838 within twelve weeks from the date of the order as pre-deposit as a condition precedent for hearing the appeal by the Tribunal.

(2.) Briefly, the facts as narrated in CWP No. 14718 of 2012 may be noticed. The petitioner is a Government of India Department under the Ministry of Railways. In the year 1981, the Central Government/Ministry of Railways which was importing various components for diesel-locomotive and other loco-components from various other countries decided to set up the petitioner-unit under the Ministry of Railways for providing such components for smooth functioning of the sovereign function of providing rail transportation. The funds are allocated to the unit through railway budget. It is not indulged in sale of the loco components being manufactured at diesel loco modernization works. It is manufacturing components within the railways and not for any other commercial use. Therefore, according to the petitioner, service tax is not applicable on it. On April 9, 2009, show-cause notice was issued to the petitioner for the period from February 1, 2008 to September 30, 2008 with regard to the demand of service tax. The petitioner submitted reply to the notice stating, inter alia, that the goods so transported were meant for captive consumption and they did not fall within the definition of "goods" as per the Sale of Goods Act, 1930. The Deputy Commissioner, Central Excise, decided the issue against the petitioner and confirmed the demand of service tax of Rs. 3,28,838 and penalties under sections 76, 77 and 78 of the Finance Act, 1994 vide impugned order dated November 27, 2009, annexure P3. Aggrieved by the order, the petitioner filed an appeal before the Commissioner (Appeals), Customs and Central Excise, Chandigarh along with application for stay and for dispensing with the condition of pre-deposit of service tax and penalty. The appeal was dismissed vide order annexure P4. Dissatisfied with the order, the petitioner filed an appeal before the Tribunal along with application for stay. The Tribunal vide order dated May 4, 2012, annexure P5 directed the petitioner to deposit the entire service tax demand within 12 weeks from the date of the order during the pendency of the appeal. Hence these petitions.

(3.) The learned counsel for the petitioner submitted that the Tribunal has erred in directing the petitioner which is a Government Department and comes directly under the Ministry of Railways to deposit the entire amount of service tax. He argued that the liability has been wrongly fastened on the petitioner.