2013 (5) TMI 290 - AT - Service Tax

Non compliance of Section 35F - Held that - Requirement of terms of Section 35F of law can be dispensed with by appellate authority on the undue hardship being shown by the assessee. Such dispensation to the extent of 50% of penalties was done by the Commissioner (Appeals) but as the appellant had failed to comply with the said order which was also upheld by the Hon ble High Court and Hon ble Supreme Court, we find that the appeal can be heard only after the appellant deposit entire dues in terms of Section 35F. We, accordingly, direct the appellant to deposit the entire amount of duty, interest and penalty within a period of 12 weeks from today and report compliance to Commissioner (Appeals), who would, after ascertaining compliance, dispose of the appeal on merits.

Summary

Issues: Non-compliance with stay order, dismissal of appeal, compliance with Section 35F requirements

The judgment revolves around the issue of non-compliance with a stay order issued by the Commissioner (Appeals), leading to the dismissal of the appellant's appeal. The Commissioner's order, requiring the appellant to deposit the entire duty, interest, and 50% of penalties under the Finance Act, 1994, was challenged in the High Court and later in the Supreme Court. The Supreme Court dismissed the special writ petition but granted an extension of two weeks to comply with the stay order. However, the appellant failed to adhere to the Supreme Court's directive, resulting in the dismissal of their appeal by the Commissioner (Appeals).

The Tribunal observed that the order passed by the Commissioner (Appeals) in accordance with Section 35F had merged with the High Court and Supreme Court orders. Since the appellant did not comply with the directives despite the extension granted by the Supreme Court, the Tribunal found no fault in the Commissioner's decision to dismiss the appeal due to non-compliance. The Tribunal emphasized the importance of complying with Section 35F, which mandates the deposit of the entire duty, interest, and penalty for the appeal process, unless undue hardship is demonstrated by the assessee.

While the Commissioner had shown leniency by dispensing with 50% of the penalties, the appellant's persistent failure to comply with the orders of the higher courts necessitated strict adherence to Section 35F requirements. As a result, the Tribunal directed the appellant to deposit the entire amount within 12 weeks and report compliance to the Commissioner (Appeals) for further consideration of the appeal on its merits. Failure to comply with this directive would render the appeal liable for dismissal by the Commissioner (Appeals), highlighting the significance of adherence to statutory provisions and court orders in legal proceedings.

In conclusion, the judgment underscores the importance of complying with stay orders and statutory requirements, as failure to do so can lead to the dismissal of appeals. The Tribunal's decision to uphold the Commissioner's dismissal of the appeal due to non-compliance serves as a reminder of the consequences of disregarding court directives and statutory provisions in legal matters.