2014 (8) TMI 740 - HC - Service Tax

Waiver of pre deposit - business of civil construction of buildings, godowns, roads etc. against works contract - Held that - Prima facie, the argument that activities of HAFED or Haryana Seeds Development Corporation are non-commercial is not acceptable. Further there is neither any pleading or material on record nor any submission by the petitioner before us to identify any error in the adjudication order in so far the valuation or classification recorded by the adjudicating authority in respect of site formation - Consequently, the petitioner shall deposit the assessed quantum of service tax and the interest thereon within six weeks. We grant waiver of pre-deposit to the extent of the assessed penalty. On compliance of pre deposit as ordered there shall be stay of the further proceedings for recovery of the penalty, pending disposal of the appeal. In default of deposit or in reporting compliance as directed, the appeal shall stand dismissed for failure of pre-deposit - no substantial question of law arises in this appeal - Decided against assessee.

Summary

Issues:
1. Whether the Tribunal was justified in ordering the appellant to deposit the entire amount of Service Tax along with interest as a condition for hearing the Appeal?
2. Whether the Tribunal was justified to pass a harsh order of pre-deposit when the appellant had a strong prima facie case on merits as well as limitation?
3. Whether grave and palpable injustice would be caused to the appellant if the respondents are permitted to execute the legal order?

Analysis:

Issue 1:
The appellant appealed under Section 35G of the Central Excise Act, 1944 against the Tribunal's order directing a pre-deposit of the service tax amount along with interest for hearing the appeal. The Tribunal justified its decision by stating that there was no prima facie case in favor of the appellant regarding the commercial nature of the activities. The Tribunal granted a waiver of pre-deposit for the assessed penalty but required the deposit of the service tax amount and interest within six weeks. The High Court upheld the Tribunal's decision, deeming the pre-deposit requirement reasonable and justified for hearing the appeal.

Issue 2:
The appellant argued that the Tribunal's directive for pre-deposit was unreasonable and unjustified, considering the strong prima facie case on merits and limitation. However, the High Court, after hearing the appellant's counsel, found no merit in the appeal. The Tribunal's decision was based on the lack of evidence or submissions identifying errors in the adjudication order. The High Court concurred with the Tribunal's assessment that the pre-deposit requirement of the service tax amount along with interest was reasonable and justified, leading to the dismissal of the appeal.

Issue 3:
Regarding the plea to extend the time for pre-deposit, the High Court, in the interest of justice, extended the deadline for depositing the amount as directed by the Tribunal. The appellant was granted time until 31.8.2014 to make the required deposit. The High Court specified that if the appellant complied with the deposit by the extended deadline, the appeal would be heard on its merits as per the Tribunal's order.

In conclusion, the High Court dismissed the appeal, upholding the Tribunal's decision on the pre-deposit requirement for hearing the appeal. The extension of the deadline for deposit was granted in the interest of justice, providing the appellant with an opportunity to proceed with the appeal if the deposit was made by the specified date.