2014 (1) TMI 1655 - HC - Service Tax

Demand of service tax - Baggage accompanying the passengers - exemption by Notification No. 29/2005-S.T., dated 15-7-2005 - Held that - The decision in Jayaswals Neco Ltd. (supra) was rendered in the context of a previous decision by an order of the Tribunal accepting a particular contention. The Court held that decisions of coordinate Benches of the same Tribunal as in the present case (the CESTAT) would have to be honoured. In the present case this Court is of the opinion that the appellant is entitled to some relief. The Tribunal has no doubt recorded that the appellant has a prima facie good case but failed to notice that the previous adjudication order, which was set aside in appeal proceedings. Having regard to the conspectus of the circumstances, we are of the opinion that ends of justice would be met if the appellant deposits 25% of the total duty demand as assessed, with proportionate interest, before the Tribunal within 4 weeks - Decided conditionally in favour of assessee.

Issues:
1. Assessment of Service Tax on activities related to baggage under Section 65(105)(zzn) of the Finance Act, 1994.
2. Rejection of appellant's contentions regarding the nature of baggage as goods and exemption under Notification No. 29/2005-S.T.
3. Tribunal's decision on waiver of pre-deposit and subsequent dismissal of the appeal due to non-compliance.
4. Allegation of error by the Tribunal in not granting full relief based on a previous favorable decision by the Commissioner (Appeals).
5. Argument for judicial discipline based on a previous decision in Jayaswals Neco Ltd. v. Commissioner of Central Excise.
6. Discretionary interference by the Court in the circumstances of the case.

Analysis:
1. The appellant contested the assessment of Service Tax on baggage activities under Section 65(105)(zzn) of the Finance Act, 1994. The appellant argued that baggage accompanying passengers should not be considered goods and that export of baggage was exempted by Notification No. 29/2005-S.T. Despite these contentions, the demand was upheld, leading to the issuance of a show cause notice and subsequent unsuccessful appeals to the Commissioner (Appeals) and the CESTAT.

2. The Tribunal's decision on the appellant's application for waiver of pre-deposit resulted in a directive for the appellant to deposit a specific amount with interest and penalty. The appellant's failure to comply led to the dismissal of the substantive appeal before the CESTAT. The appellant then approached the High Court with a writ petition, which was withdrawn as an appeal to the High Court was deemed appropriate.

3. The appellant's counsel argued that the Tribunal erred in not granting full relief, citing a previous favorable decision by the Commissioner (Appeals) on similar grounds. The counsel emphasized the importance of judicial discipline based on the decision in Jayaswals Neco Ltd. v. Commissioner of Central Excise, Nagpur.

4. The Court considered the submissions and acknowledged that the appellant was entitled to some relief. It noted that the Tribunal failed to consider the previous adjudication order that favored the appellant. In light of these circumstances, the Court directed the appellant to deposit 25% of the total duty demand with interest within a specified timeline. Upon compliance, the order dismissing the appeal was set aside, and the matter was to be restored to the Tribunal for further proceedings.

5. The Court allowed the appeal on the specified terms, providing a pathway for the appellant to address the issues raised regarding the assessment of Service Tax on baggage activities.

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