Bhaskar Bhattacharya, J
Instead of disposal of the application, we have heard out the appeal itself by treating as on day?s list.
This appeal is at the instance of a writ-petitioner and is directed against an order dated 8th April, 2010 passed by a learned Single Judge of this Court thereby disposing of an application for modification and/or variation of the earlier interim order dated 23rd February, 2010 by merely extending the time for deposit of the amount ordered to be deposited by the earlier order dated 23rd February, 2010 till 7th May, 2010 on the prayer of the appellant after recording the submission of the learned Additional Solicitor general, appearing for the respondents, that the appellant should be entitled to interest at the rate 10% on the amount to be deposited if the writ-application succeeded in the long run.
Being dissatisfied, the writ-petitioner has come up with the present appeal.
In the writ-application, out of which present appeal arises, the appellant challenged the explanation contained in the notification bearing No.4/2005 dated 1st March, 2005 and the explanation contained at serial Nos.7 & 10 to the notification being No.1/2006 dated 1st March, 2006 in so far as it purported to include the value of the goods and materials supplied by the customers freely without any consideration in the gross amount charged for the purpose of imposing service tax as violative of Article 14 of the Constitution of India. In the said writ-application, other consequential relief was prayed for restraining the respondents from including the value of the goods and materials which had been supplied freely by the customers without any consideration to the writ-petitioner being the service provider and from imposing any service tax on the said amount and also from realizing the demand made in the show cause notice dated 17th September, 2009 issued by the respondent No.1 wherein demand was made from the writ-petitioner to pay service tax on 100% of the gross amount received from the customers for the service provided by the petitioner by levying service tax on the amount availed as abatement.
On 23rd February, 2010 when the said writ-application was moved before a learned Single Judge of this Court, His Lordship directed the parties to complete affidavit by 19th April, 2010. Thereafter, His Lordship recorded a prima facie case for passing an interim order and directed that if the writ-petitioner deposited a sum of Rs.3,68,18,583/- within three weeks from the date of communication of that order, there should be an interim order directing that adjudication proceeding might go on and be concluded by the respondents but the respondents should not include for the purpose of determining taxable service the supply of free material to the petitioner and to that extent the explanation appearing against serial Nos.7 & 10 in the Table given in the notification dated 1st March, 2006 should not be applied to the detriment of the writ-petitioner. It was further made clear that the payment so made and the order passed was without prejudice to the rights and contentions of the parties and subject to final order that might be passed.
As indicated above, an application for modification of the said order was filed at the instance of the appellant, when the learned Single Judge after perusing the materials on record held that the order dated 23rd February, 2010 did not call for any interference. However, His Lordship recorded the submission made by the learned Additional Solicitor General, appearing for the respondents, that the writ-petitioner should be entitled to the interest @ 10% on the amount to be deposited in the event the writ-application succeeded.
It further appears that on the prayer of the learned senior advocate appearing on behalf of the writ-petitioner, the learned Single Judge extended the time for deposit of the amount mentioned in the order dated 23rd April, 2010 till 7th May, 2010 and further restrained the respondents from taking any coercive action till 11th May, 2010.
Being dissatisfied, the writ-petitioner has come up with the present appeal.
Dr. Pal, the learned senior advocate appearing on behalf of the appellant, laboriously contended before us that the direction for deposit of the amount of Rs.3,68,18,583/- was based on total misreading of the statement made in paragraph 32 of the writ-application. Dr. Pal contends that his client challenged the legality of the notification and in the said paragraph 32 of the application disputed the demand of Rs.39 crore and odd by contending that even if for the sake of argument, the said provision is said to be intra vires, at the most a sum of Rs.3,68,18,583/- should be payable. Dr. Pal contends that there was, thus, no admission on the part of his client that the aforesaid amount was due.
Dr. Pal next contends that in an earlier writ-application filed by his client in respect of demand for the earlier period, the same learned Single Judge passed an interim order directing the respondents not to include, for the purpose of taxable service, the supply of free material to the petitioner without imposing any condition and, thus, the learned Single Judge should have modified the order dated 23rd February, 2010 in tune with the earlier order passed in respect of the writ-application challenging demand for a previous year.
Mr. Farook M. Razack, the learned Additional Solicitor General appearing on the behalf of the respondents, at the very outset, disputed the maintainability of the present appeal against order dated 8th April, 2010 on the ground that the appellant itself having prayed for extension of time to deposit and on its prayer the Court having granted such relief, the appellant should not be permitted to dispute the correctness of the order impugned.
Even on merit, Mr. Razack contends that in the writ-application the writ-petitioner has challenged the legality of the notification granting exemption and, therefore, so long the notification is not declared ultra vires Article 14 of the Constitution of India, there was no question of giving unconditional benefit of exemption by ignoring the terms of notification issued in terms of Section 93(1) of the Finance Act, 1994. Mr. Razack, therefore, prays for dismissing the appeal.
After hearing the learned counsel for the parties and after going through the materials on record, we find that the writ-petitioner in the application under Article 226 of the Constitution of India has challenged the notification of exemption issued in exercise of power under Section 93(1) of the Act as violative of Article 14 of the Constitution of India. In our opinion, in this type of a litigation where the provision of exemption has been challenged as violative of Article 14 of the Constitution of India, there is no scope of staying the operation of the exemption or granting exemption on a modified term in the field of collection of revenue. It is needles to mention that any collection of revenue made on the basis of any provision which is subsequently declared as ultra vires the Constitution of India, should be refunded and at the stage of disposing of the writ-application, the Court can pass appropriate order compensating the person who has paid the revenue on the basis of such ultra vires provision.
In this type of a matter, if merely on the basis of recording a prima facie case without taking into consideration the balance of convenience and inconvenience or the case of irreparable injury of the applicant, an injunction is passed restraining the Government from realizing revenue, it will be prejudicial to the interest of the nation itself.
The learned Single Judge, in this case, has found that if the provision of exemption is not found to be ultra vires, the demand of the respondents should be limited to Rs.3,68,18,583/- even according to the admission of the writ-petitioner and, thus, His Lordship directed the writ-petitioner to deposit the amount.
We, therefore, find no reason to interfere with the discretion exercised by the learned Single Judge by which His Lordship directed the writ-petitioner to deposit the admitted amount, which, according to the writ-petitioner, is payable if the writ-application, fails.
We also find substance in the contention of Mr. Razack that the writ-petitioner, having taken benefit of extension of time for depositing the amount on the basis of the prayer made by his own counsel, should not be permitted to dispute the correctness of the order of modification. In this case, on the prayer of the appellant, the time was extended and the respondents were restrained from taking coercive measure against the appellant. After getting such benefit, the appellant should not be permitted to challenge the said order.
On the aforesaid ground also, we should not entertain this appeal.
As regards the decision of the learned Single Judge of the Madras High Court in the case of Larsen & Tourbra Ltd vs. Union of India reported in 2007(7) S.T.R 123 (Madras), relied upon by Dr. Pal, we find that by an order consisting of two paragraphs, the learned Single Judge after recording prima facie case of the petitioner granted an ad interim order of injunction without considering the question of balance of convenience and inconvenience. We are of the view that in a revenue matter, when a particular provision has been challenged as ultra vires the provision of the Constitution, the Court, on mere finding of prima facie case, should not grant unconditional injunction restraining the government from collecting revenue on the basis of such provision impugned without making adequate protection of realization of the same in the event the challenge fails by putting the petitioner on terms. In the other decision of the Division Bench of the Delhi High Court in the case of Era Infra Engineering Ltd. vs. Union of India reported in 2008(11) S.T.R 3 (Delhi) relied upon by Dr. Pal, the Delhi High Court has followed the abovementioned Madras decision but has not considered the question of balance of convenience and inconvenience. With great respect to the learned Judges in those two cases
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we are unable to follow those as a valid precedent. Lastly, we are not impressed by the submission of Dr. Pal that merely because in a pending litigation relating to similar demand for a previous year the learned Judge has passed unconditional interim order, such order should also be passed in the subsequent litigation between the parties for the simple reason that for not preferring any appeal against an erroneous interim order in respect of demand of previous year, the Revenue is not bound by that decision in respect of demand for a subsequent year. On consideration of the entire materials on record, we, thus, find that this appeal is devoid of any substance and is consequently dismissed. In the facts and circumstances, there will be, however, no order as to costs. (Bhaskar Bhattacharya, J.) I agree. (J.N. Patel, CJ.) Later: Urgent photostat certified copy of this judgment and order be made available to the parties, if applied for, within Tuesday (13.7.10) subject to compliance with all requisites formalities.