2014 (5) TMI 217 - AT - Service Tax

Maintainability of appeal and stay order passed by the commissioner (Appeals) - Order passed u/s 85 - Appeal u/s 86 - Held that - From an interactive analyses of the provisions of Sections 83 and 85 of the 1994 Act read with the proviso to Section 35 F of the 1994 Act, the conclusion is compelling that pre deposit of the entire adjudicated liability including tax / duty, interest and penalty (if any) is normally the sine qua non for triggering the authority of the appellate Commissioner to hear an appeal, whether under provisions of 1944 Act or the 1994 Act. Where discretion is exercised by such appellate authority under the proviso to Section 35F and waiver either wholly or partly is granted, of the pre deposit requirement, appellate Commissioner gets jurisdiction to hear the appeal thereafter and on compliance by an appellant of the pre deposit if any is ordered by the appellate Commissioner by an order passed under the first proviso to Section 35 F A pre deposit (unless wholly waived) either in terms of Section 35 F open compliance with the orders passed under the first proviso to Section 35 F, is a condition precedent to the exercise of the substantive appellate jurisdiction of the Commissioner (Appeals), to adjudicate upon the appeal or an interlocutory proceeding therein such as grant of stay. An order of the appellate Commissioner under Section 35F of the 1944 Act read with Section 83 of the 1994 Act is not a proceeding strict senso under Section 85 of the 1994 Act. It is in the nature of preliminary step leading to the substantive adjudication process, dealing only with the issue of pre deposit and an application for waiver thereof. On the aforesaid premise, the impugned order of the appellate Commissioner passed under the proviso to Section 35 F of the 1944 Act, directing the appellant to deposit 50% of the adjudicated tax liability (excluding the interest and penalty component) cannot be considered to be an order passed under Section 85 of the 1994 Act. Therefore no appeal to this Tribunal is maintainable under Section 86 of the said Act - Decided against assessee.

Summary

Issues:
1. Consideration of application for stay and disposal of substantive appeal without pre-deposit waiver.
2. Appeal against order of Commissioner (Appeals) directing deposit of tax liability.
3. Maintainability of appeal under Section 35 F of the Central Excise Act, 1944.

Issue 1:
The judgment addresses the situation where, at the stage of considering an application for stay (No. 59078 of 2013), the substantive appeal is disposed of without the requirement of pre-deposit. The order was passed against an appeal challenging the order of the Commissioner (Appeals) dated 06.06.2013, which directed the appellant to deposit 50% of the adjudicated tax liability within 15 days. The adjudicating authority had assessed a service tax liability of Rs. 23,87,585/- along with interest and penalties. The Tribunal waived the pre-deposit requirement due to the narrow compass of the issue.

Issue 2:
The appeal questions the maintainability under Section 35 F of the Central Excise Act, 1944 against the order of the Commissioner (Appeals) directing the deposit of tax liability. Section 85 of the Finance Act, 1994 is examined, which outlines the procedures for preferring an appeal before the Commissioner (Appeals). The judgment delves into the statutory provisions of Section 85, emphasizing the powers of the appellate authority to hear appeals and make orders under the Act. The proviso to Section 35 F allows the appellate Commissioner to dispense with the deposit of duty demanded or penalty levied under certain circumstances.

Issue 3:
The judgment extensively analyzes the interplay between Sections 83 and 85 of the Finance Act, 1994, along with the proviso to Section 35 F of the Central Excise Act, 1944. It concludes that the pre-deposit of the entire adjudicated liability is generally necessary to trigger the jurisdiction of the appellate Commissioner to hear an appeal. The waiver of pre-deposit by the appellate authority grants jurisdiction to hear the appeal, subject to compliance with any deposit ordered. The order under Section 35 F is considered a preliminary step, not a proceeding under Section 85 of the Finance Act, 1994. Consequently, the appeal against the order directing the deposit of 50% of the tax liability is deemed not maintainable, leading to its rejection by the Tribunal.

This detailed judgment clarifies the nuances of pre-deposit requirements, appellate jurisdiction, and the interrelation of statutory provisions under the Central Excise Act, 1944 and the Finance Act, 1994.