The Delhi High Court has considered the waiver of Rs. 17 lakh pre-deposit as the petitioner already paid substantial Rs.5.36 crore against tax demand.
The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta has relied on the decision of Mohammed Akmam Uddin Ahmed & Ors. v. Commissioner Appeals Customs And Central Excise & Ors., 2023:DHC:2846-DB, in which it was held that the Court has the power to exercise discretion to waive requirement of pre-deposit of penalty in rare and deserving cases.
The Petitioner submitted that as the service provided by the Petitioner was a composite works contract, no service tax was liable to be paid by the Petitioner. In the Order-in-Original, exemption under Notification No.18/2005-ST dated 7th June 2005, Notification No.15/2004-ST dated 10th September, 2004 as amended and Notification No.1/2006 dated 1st March, 2006 was not granted to the Petitioner. The total demand raised upon the Petitioner was to the tune of Rs. 4,28,08,029/- of service tax including education cess and other cess. The total amount of service tax liability was determined as Rs. 8,35,86,570/- out of which, the Petitioner had already made some payments and the demand in the Order-in-Original was raised for the remaining amounts.
The Order was challenged by the Petitioner before the CESTAT. The Petitioner sought waiver of the pre-deposit. The Registry of CESTAT had raised a defect for non-payment of the entire pre-deposit amount in terms of Section 35F of the Central Excise Act, 1944.
The CESTAT directed the Petitioner to deposit a sum of Rs. 17,21,477. A rectification application was filed by the Petitioner before CESTAT seeking rectification of the earlier order which was also rejected vide the order dated 15th May, 2025. Thus, both the orders dated 27th September, 2024 and 15th May, 2025 are under challenge in this petition.
The contention Petitioner contended that a substantial portion of the service tax amounts have already been deposited and the same would deserve to be given credit for, at the stage of pre-deposit. In his submission, the Petitioner disputes the entire demand itself as composite works contracts are not liable to service tax and are entitled for exemption. Even if the total amount is taken, the Petitioner has already deposited almost 39% of the total demanded amount which is much more than the pre-deposit.
The department contended that the amounts which were paid by the Petitioner in respect of the entire service tax demand was on the basis of self-assessment. Therefore, the SCN related only to the short-paid amount. In view of the same, the Petitioner has to pay pre- deposit qua the short paid amount and no credit can be given for the earlier deposited amount as the same is not even the subject matter of the SCN.
The court held that the Petitioner is granted waiver of a sum of Rs. 17,21,477/-. The appeal of the Petitioner before CESTAT shall now be adjudicated on merits and shall not be dismissed on the technical ground of non-deposit of the balance pre-deposit amount.
Case Details
Case Title: MCM Construction And Real Estate Private Ltd. Versus Commissioner, Central Goods And Service Tax
Case No.: W.P.(C) 9720/2025 & CM APPL. 40736/2025
Date: 14/07/2025
Counsel For Petitioner: Prabhat Kumar
Counsel For Respondent: Samiksha Godiyal
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