HC quashes CESTAT's order asking Air India to deposit Rs 8 cr

Considering the financial hardships of Air India, the Delhi High Court has quashed CESTAT's order directing it to make a pre-deposit Rs 8 crore before hearing its plea challenging the Service Tax department's demand of about Rs 65.5 crores for 2006-2007.
Allowing the plea of the public sector undertaking, a bench of justices B D Ahmed and Bibhu Bakhru quashed the order passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on March 5 this year and directed the Tribunal to hear Air India's plea without any pre-deposit amount.
"In these circumstances, particularly in view of the fact that the financial hardship of the appellant (Air India) has already been recognised by the Tribunal in other orders... In our opinion, the entire amount of tax, penalty and interest demanded ought to have been waived as a condition for hearing the appeal.

"Consequently, we modify the order of the Tribunal by directing that there shall be full waiver of the requirement of pre-deposit the tax, penalty and interest. The appeal of the appellant before the Tribunal shall be heard without insisting on any pre-deposit. It is obvious that the respondent shall also not press for recovery of the tax, penalty and interest amount till the disposal of the appeal by the Tribunal," the bench said in a judgement recently.
According to the national carrier's plea, on November 14, 2012, the Commissioner of Service Tax had demanded Rs 65,48,52,240 as service tax from it for the year 2006-07.