JAYSHREE INSULATORS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The above application for waiver of pre -deposit of Rs. 7,50,000/ - along with interest arises out of the Order in Appeal passed by the Commissioner of Central Excise in terms of Section 84 of the Finance Act.

(2.) The brief facts are that the show cause notice was issued requiring the applicants to pay service tax for goods transport operators' service provided to them for the period 16 -11 -97 to 1 -6 -98 since they had neither applied for registration with Central Excise Authorities nor paid the service tax and hence there was a contravention of Sections 68 and 70 of the Finance Act, 1994. The notice directed them to furnish quarterly return in form ST -3 and proposed recovery of interest for the delayed payment and proposed penal action under Sections 76, 77 and 79 of the Finance Act, 1994. Prior to the issue of the notice, the validity of Rule 2(d)(xvii) of Service Tax Rules, 1944 was challenged before the Hon'ble Supreme Court and prior to the adjudication of the notice, the Apex Court held in the case of Laghu Udyog Bharti v. Union of India that the Rule was ultra vires of the Act and accordingly quashed the Rule. In view of the Supreme Court judgment, the Deputy Commissioner vide Order -in -Original No. D/STC/43/2000, dated 16 -2 -2000 dropped the show cause notice. The Commissioner of Central Excise directed issue of notice for revision of the order of the Dy. Commissioner, in view of the retrospective amendment of Service Tax Rules by Section 117 of the Finance Act, 2000, which states that notwithstanding anything contained in any judgment, decree or order or any Court, Tribunal or other authority, Sub -clause (xii) and (xvii) of Clause (d) of Sub -rule (1) of Rule 2 of Service Tax Rules, 1994 as they stood immediately before the commencement of the Service Tax (Amendment) Rules, 1998 shall be deemed to be valid as if the said sub -clause had been in force at all material times. In the present impugned order, the Commissioner has held that in view of the retrospective validation of the Service tax, the applicants were required to pay Service tax on the gross amount of the transport charges excluding insurance charges paid by them to the goods transport operator. He directed the applicants to work out the tax payable and pay the same along with interest. The applicants have worked out the amount as above and have filed the present application for waiver of pre -deposit and stay of recovery.

(3.) The main contention of the applicants who are represented by their counsel Shri R.C. Saxena is that the notice does not propose recovery of service tax but only proposes recovery of interest and penalty (which has not been imposed by the Commissioner in revision as per the relevant provision of the Act). They, therefore, pray for waiver of pre -deposit of the amount of service tax and interest.