2014 (9) TMI 541 - HC - Service Tax

Waiver of the pre-deposit - tribunal directed the appellant to make pre-deposit of ₹ 50 lacs against the demand of ₹ 63,57,940/- - request for adjournment was not accepted by the tribunal - principle of natural justice - Held that - Apparently the impugned order was passed without hearing the petitioner. In the order itself it was recorded that a request was made on behalf of the petitioner for an adjournment on the ground on inconvenience of the counsel for the petitioner. However, having regard to the fact that the appeal was filed long back around two years ago the CESTAT was not inclined to grant any adjournment and thus on the basis of the material available on record the impugned order came to be passed. In view of the petitioner s plea that it has not collected the disputed Service Tax and that the petitioner is hard pressed for funds, we are of the opinion that it is a fit case for modifying the condition imposed in the impugned order. - petitioner to deposit 50% of the Service Tax demand - decided partly in favor of assessee.

Summary

Issues:
1. Service tax demand and waiver of pre-deposit.

Analysis:
The judgment pertains to a writ petition filed by a Government of India undertaking under the Ministry of Steel, registered as a service provider under the Finance Act, 1994. The petitioner was aggrieved by an Order-in-Original demanding a specific amount towards short paid service tax, education cess, interest, and penalty. The petitioner appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) seeking waiver of the pre-deposit condition imposed. The CESTAT's order directed a pre-deposit of Rs. 50 lakhs within four weeks, subject to which the balance demand would be waived pending the appeal. The petitioner challenged this order in the High Court.

Upon hearing both parties and examining the record, the High Court noted that the impugned order was passed without giving the petitioner an opportunity to be heard. Although a request for adjournment was made on behalf of the petitioner, the CESTAT, considering the appeal's age, declined to grant the adjournment. Despite the Service Tax demand being Rs. 63,57,940, the CESTAT directed a deposit of Rs. 50 lakhs for pre-deposit. The petitioner contended that it had not collected the disputed Service Tax and was facing financial constraints, leading the High Court to consider modifying the conditions of the impugned order.

Consequently, the High Court set aside the impugned order and directed the petitioner to deposit 50% of the Service Tax determined in the Order-in-Original by a specified date. Failure to comply would result in the revival of the impugned order. The judgment concluded without imposing any costs on either party.