2013 (6) TMI 77 - HC - Service Tax

Stay order - revenue neutral - tribunal directed to make pre deposit of Rs. 50 lakhs - services under the category of man power recruitment and supply agency services - held that - The submission of the appellants is that assuming that the appellants are held liable to pay Service Tax, in view of the fact that the customer who is entitled to take credit of Service Tax would be entitled to refund as excise duty has been paid on the final products in cash without availing the credit and therefore the demand is in fact revenue neutral. It is, however, contended on behalf of the revenue that it is not a fit case for 100% waiver of the pre-deposit. In our opinion, in the facts of the present case, the duty demand be a case of revenue neutral, it would be just and proper to hear the appeal on merits without insisting pre-deposit. Order of the Tribunal directing pre-deposit of Rs. 50 lakhs is quashed and set aside and the tribunal is directed to hear the appeal on merits without insisting on pre-deposit. - Decided in favor of assessee.

Summary

Issues:
Whether CESTAT was justified in directing the appellants to make a pre-deposit of Rs. 50 lakhs for entertaining the appeal against the order-in-original dated 14th July, 2010.

Analysis:
The judgment in question revolves around the issue of whether the CESTAT was justified in requiring the appellants to make a pre-deposit of Rs. 50 lakhs to proceed with their appeal against the order-in-original dated 14th July, 2010. The adjudicating authority had confirmed a service tax demand of Rs. 3.86 crores with interest and penalty, alleging that the appellants had provided services under the category of man power recruitment and supply agency services between June 16, 2005, and May 31, 2009. The appellants contended that they were not liable to pay service tax. Even if they were found liable, they argued that the demand would be revenue neutral as the customer receiving the services had paid excise duty on final products, entitling them to a refund. The revenue, however, opposed a 100% waiver of the pre-deposit. The court, after considering the arguments, held that in a scenario where the duty demand is revenue neutral, it would be appropriate to allow the appeal to be heard on merits without insisting on a pre-deposit.

Therefore, the High Court quashed and set aside the Tribunal's order directing the pre-deposit of Rs. 50 lakhs and instructed the Tribunal to proceed with hearing the appeal on its merits without requiring the pre-deposit. The appeal was disposed of with no order as to costs.