2014 (3) TMI 1094 - AT - Service Tax

Waiver of pre-deposit - Non-payment of service tax - financial difficulty - Held that - in view of the fact that the appellants have accepted the liability, they are required to deposit the entire amount of tax with interest and a portion of penalty even though financial difficulties also pleaded but not supported by evidence - Subject to compliance of above deposit with cost of condonation, there shall be waiver of pre-deposit and stay against recovery in respect of the balance dues during pendency of the appeal.

Summary

Issues: Delay in filing appeal, Service tax liability, Exemption claim for specific service, Imposition of penalty

Delay in filing appeal:
The appellant filed an appeal with a delay of 73 days citing the appellant's illness as the reason for the delay. The impugned order was received on 13-9-2013, and the appeal could have been filed earlier. The Tribunal considered the appellant's illness and decided to condone the delay upon payment of a cost of Rs. 10,000. The stay application filed by the appellant was also considered subject to the deposit of the required amount within the prescribed period.

Service tax liability:
The appellant, a partnership firm, was engaged in various services and was found to have not deposited service tax for the year 2011-12. The Order-in-Original demanded Rs. 1,18,57,607 along with interest and penalty under Section 76 of the Finance Act, 1994. The appellant had only deposited the tax liability for two contracts but disputed the liability for the remaining amount. The Tribunal noted that the appellants had accepted the liability for the balance demand and directed them to deposit the entire amount of tax with interest and a portion of the penalty within twelve weeks.

Exemption claim for specific service:
The appellant claimed exemption for a specific service related to education undertaken as a sub-contract for a medical college. The service was argued to be exempted as it was related to education and not classifiable under the category of 'site formation and clearance service'. The Tribunal found prima facie that the service may not fall under the category claimed by the appellant. As the appellants accepted the liability for the remaining demand, they were directed to deposit the entire tax amount along with interest and a portion of the penalty.

Imposition of penalty:
In light of the observations and the appellant's acceptance of the tax liability, the Tribunal directed the appellant to deposit Rs. 1,01,00,000 towards service tax, along with interest and Rs. 20,00,000 towards penalty within twelve weeks. Additionally, a cost of Rs. 10,000 for condonation of delay was also to be deposited. Compliance with these requirements would result in a waiver of pre-deposit and a stay against recovery for the balance dues during the appeal's pendency.