2014 (5) TMI 92 - HC - Service Tax

Maintainability of appeal - Appeal dismissed for non compliance of pre deposit order - Held that - Submission of parties basically relate to the merits of the appeal and have been considered by the Appellate Tribunal while disposing of the stay/waiver application filed by the appellant before the Tribunal. We do not wish to express any opinion at this stage as all these contentions will be examined by the Tribunal when it proceeds to decide the Appeal. However, as the Bharat Sanchar Nigam Ltd. is a Corporation which is owned and controlled by the Central Government and the appeal has been dismissed by the Appellate Tribunal as a consequent of a default in deposit of the amount directed by the Tribunal by the order dated 17 September 2013, it is considered appropriate, in the facts and circumstances of the case, that in the event the appellant now deposits half of the amount indicated by the Appellate Tribunal in its order dated 17 September 2013 within a period of eight weeks - Conditional stay granted.

Summary

Issues:
1. Compliance with interim directions issued by the Tribunal for depositing a specific amount.
2. Justification of demanding the entire adjudicated amount along with interest and penalty under Section 35F of the Central Excise Act, 1944.
3. Applicability of waiver of pre-deposit in the case of the appellant.

Comprehensive Analysis:

Issue 1: Compliance with Interim Directions
The appeal filed by Bharat Sanchar Nigam Ltd. Ballia under Section 35-G of the Central Excise Act, 1944 arose from an order of the Customs, Excise and Service Tax Appellate Tribunal New Delhi, which was dismissed due to the appellant's failure to comply with the interim directions issued by the Tribunal. The directions required the appellant to deposit a specific amount along with corresponding interest under Section 75 of the Finance Act, 1994. Despite framing substantial questions of law, the primary controversy revolved around the justification of demanding the entire adjudicated amount along with interest and penalty.

Issue 2: Justification of Demanding Entire Adjudicated Amount
The appellant, registered under Section 69 of the Finance Act, 1994, was issued a demand cum show-cause notice for a short collection/payment of service tax. The Adjudicating Officer confirmed the demand and imposed penalties under various sections of the Act. The Tribunal, in its detailed order, observed that the appellant failed to provide a clear basis for contesting the liability assessment. While not granting full waiver of pre-deposit, the Tribunal stayed further recovery proceedings on the condition that the appellant deposits the specified amount within a given timeframe. The appellant's failure to comply led to the dismissal of the appeal by the Tribunal.

Issue 3: Applicability of Waiver of Pre-Deposit
The Tribunal considered the appellant's arguments regarding the submission of relevant facts and service tax payments. Despite these contentions, the Tribunal emphasized the importance of complying with the directed deposit. Given the appellant's status as an instrumentality of the State, the Tribunal allowed a conditional stay on further recovery proceedings if half of the specified amount was deposited within a set period. Failure to meet this condition would result in the dismissal of the appeal.

In conclusion, the judgment highlighted the significance of complying with tribunal directions, the rationale behind demanding the entire adjudicated amount, and the conditional applicability of waiver of pre-deposit in the case at hand.