2014 (11) TMI 1116 - AT - Service Tax

Principles of natural justice - reimbursement of the expenses is not includible in the assessable value - Held that - appellants have shown a deliberate behavior of evading service tax. In the stay application they make a mention of financial hardship but have provided no evidence thereof and they have also not explained as to how even if there is any financial hardship, that will fall in the category of undue financial hardship - appeal dismissed for failure of pre-deposit.

Summary

Issues:
1. Service tax demand confirmation for the period April 2006 to March 2011.
2. Inclusion of various allowances and reimbursements in the assessable value.
3. Allegations of violation of natural justice principles.
4. Appellants' plea of financial hardship.
5. Pre-deposit requirement and stay on recovery of balance liabilities during appeal.

Analysis:

1. The judgment deals with the confirmation of a service tax demand amounting to &8377; 1,21,36,522/- for the period April 2006 to March 2011. The adjudicating authority found that the appellants did not pay service tax on the full value of the Security Agency service provided by them during this period.

2. The appellants contended that the order was ex-parte and objected to the inclusion of various allowances like Uniform allowance, Bonus, PF, OTA, ESIC, and Workman's Insurance in the assessable value. They argued that reimbursement of expenses should not be considered for service tax calculation.

3. The judgment addresses the issue of alleged violation of natural justice principles. The adjudicating authority noted that the appellants failed to respond to the Show Cause Notice adequately. Despite requesting additional time for a reply during a personal hearing, the appellants did not submit any response. The authority found the claim of violation of natural justice to be baseless.

4. Regarding the appellants' plea of financial hardship, the tribunal observed that while the appellants mentioned financial difficulties, they provided no evidence to support their claim. The tribunal required a pre-deposit of the balance of the adjudicated service tax liability along with proportionate interest within a specified timeframe.

5. The judgment outlines the pre-deposit requirement and the stay on the recovery of the balance liabilities during the pendency of the appeal. An amount of &8377; 50 lacs had already been appropriated towards the service tax liability, and the tribunal ordered the pre-deposit of the remaining balance. Failure to comply with the pre-deposit condition would result in the dismissal of the appeal for non-compliance.

Overall, the judgment addresses various issues related to service tax demand confirmation, inclusion of allowances in assessable value, violation of natural justice principles, financial hardship plea, and the pre-deposit requirement with a stay on recovery during the appeal process.