2014 (7) TMI 450 - AT - Service Tax

Waiver of pre deposit - Non compliance with pre deposit order - Held that - First appellate authority s order of directing pre-deposit of 25% of tax amount and 25% of the penalty seems to be excessive. In our view, the ends of justice will be met of the appellant is directed to deposit ₹ 5 lakhs for hearing and disposing the appeal on merits. Accordingly, we direct the appellant to deposit an amount of ₹ 5 lakhs (Rupees Five Lakhs only) within a period of eight weeks from today and report compliance before first appellate authority on or before 26.05.2014. The first appellate authority, on ascertaining such a compliance, shall restore the appeal to its original number and dispose of the same on merit, without insisting for any further deposit - Decided conditionally in favour of assessee.

Summary

Issues:
1. Compliance with Stay Order for depositing service tax liability and penalty.
2. Appeal rejection by first appellate authority.
3. Imposition of penalties under Section 76 & 78 of Finance Act, 1994.
4. Consideration of limitation aspect by the first appellate authority.
5. Excessive pre-deposit amount directed by the first appellate authority.
6. Direction for deposit of a reduced amount for hearing and disposal of the appeal on merits.

Analysis:

1. The Tribunal noted that the issue at hand was narrow, leading to the immediate disposal of the Stay Petition. Subsequently, the appeal itself was taken up for disposal after hearing both sides.

2. The first appellate authority had dismissed the appeal due to the appellant's failure to comply with the Stay Order, which required a deposit of 25% of the service tax liability and penalty. The appellant argued that the authority did not consider the issue of limitation and had imposed excessive pre-deposit amounts. The Tribunal acknowledged the appellant's contentions but refrained from delving into the merits or limitation aspect. Instead, the Tribunal directed the appellant to deposit a reduced sum of Rs. 5 lakhs for the appeal's hearing and disposal.

3. The Tribunal found the initial pre-deposit amount excessive and believed that justice would be served by reducing it to Rs. 5 lakhs. The appellant was instructed to comply within eight weeks and report back to the first appellate authority. Upon compliance verification, the appeal was to be reinstated for a merit-based decision without further deposit requirements, emphasizing the application of natural justice principles.

4. Consequently, the Stay Petition and the appeal were disposed of in accordance with the prescribed directives, ensuring a fair and balanced approach to the matter at hand.

Judgment Highlights:
- Compliance with Stay Order for depositing service tax liability and penalty.
- Appeal rejection due to non-compliance with pre-deposit requirements.
- Reduction of pre-deposit amount to Rs. 5 lakhs for hearing and disposal of the appeal on merits.
- Emphasis on natural justice principles in the appellate process.