2014 (12) TMI 164 - HC - Service Tax

Waiver of condition of pre-deposit - Non Co-operation with department and the plea sought to be raised for the first time before the Tribunal was neither taken before the adjudicating authority nor raised in the pleading - Held that - Tribunal is required to deal with an application seeking waiver of pre-condition deposit of duty after recording its satisfaction relating to undispute hardship and the interest of revenue. The point of non co-operation before the adjudicating authority by no stretch of imagination can be considered for disposal of such application, it is a settled proposition of law that while considering an application seeking waiver of pre-condition deposit of duty, there must be a recording relating to a prima facie case, and unjust hardship taken into account the interest of the revenue. The order impugned before this Court is bereft of any such findings. The Tribunal have proceeded to dispose of the said application on extraneous consideration and, therefore, cannot be legally sustained. Accordingly the order impugned is quashed and set aside. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Challenge to the order passed by the Customs & Excise and Service Tax Appellate Tribunal regarding waiver of pre-deposit of duty based on alleged non-cooperation and failure to raise a plea before the adjudicating authority.

Analysis:
The High Court examined the order of the Tribunal which disposed of an application for waiver of pre-deposit of duty due to alleged non-cooperation by the petitioners and failure to raise a plea before the adjudicating authority. The petitioners contended that the findings were not supported by the records. The Court noted the reply to a show-cause notice where it was stated that the gross-receipts in the balance-sheet included service and non-service items, supported by material submitted to demonstrate no non-cooperation during adjudication. The Court found the Tribunal's findings on non-cooperation and failure to raise a plea to be erroneous and not in line with the records.

The High Court further emphasized that the Tribunal must consider an application for waiver of pre-condition deposit of duty after ensuring undisputed hardship and the interest of revenue. It highlighted the settled legal principle that such applications require a prima facie case, consideration of unjust hardship, and the revenue's interest. The impugned order lacked these essential findings and was based on extraneous considerations, rendering it legally unsustainable. Consequently, the High Court quashed the order and directed the Tribunal to reconsider the application, provide a hearing to the petitioner, and issue a decision within three weeks, emphasizing that the order did not determine the application's merits.

In conclusion, the High Court disposed of the writ petition without costs, setting aside the Tribunal's order and instructing a fresh consideration of the application for waiver of pre-deposit of duty, ensuring compliance with legal requirements and independent decision-making by the Tribunal.