2015 (1) TMI 861 - HC - Service Tax

Waiver of pre deposit - Management, Maintenance or Repair Service - whether the payment of service tax has to be made by the service recipient or by the appellant, has to be considered by the Tribunal in the Appeal - Held that - It is a clear case of material evidence, which has to be appreciated by the Tribunal insofar as invocation of Rule 2(1)(d) of the Service Tax Rules, 1994 by the Original Authority, which was confirmed by the Commissioner of Central Excise (Appeals). The Adjudicating Authority was of the view that either the consignor or consignee, who incurred the freight, has to pay the service tax and as the appellant was not able to furnish documentary evidence, such as consignment notes, to prove that the freight and service tax was paid by the consigneee, the demand was confirmed. The Commissioner of Central Excise (Appeals), to uphold the view of the Adjudicating Authority, was of the view that profit and loss account and other documents produced by the appellant show that there has been non payment of service tax. The Tribunal, after following the decision in the case of RAMCO Cements Ltd., who is the recipient of service, held that the appellant had paid only freight and hence liable to pay tax under this category and directed pre-deposit of ₹ 10.00 lakhs. - disputed fact does not merit consideration or does not justify any modification of the order passed by the Tribunal. - Decided against assessee.

Summary

Issues:
1. Whether pre-deposit can be ordered under Section 35G of the Central Excise Act, 1944 based on a different and irrelevant order?
2. Whether pre-deposit can be ordered when the service tax liability is not on the appellants as per Rule 2(1)(d)(v) of the Service Tax Rules, 1994?

Analysis:
1. The appellant, a service provider, was found to have short payment of service tax and not showing the entire amount of service charges received. The Departmental audit officers discovered unpaid service tax on transportation charges, leading to a demand notice of Rs. 8,53,874.
2. The appellant argued that they were not liable to pay service tax on transportation charges as per Rule 2(1)(d) of the Service Tax Rules, 1994. However, the Adjudicating Authority confirmed the demand, citing provisions under the Finance Act, 1994.
3. The Commissioner of Central Excise (Appeals) partially upheld the order, stating that for certain periods, the demand could not be raised, but for others, the appellant failed to provide sufficient evidence.
4. The appellant appealed further to the Tribunal, seeking waiver of pre-deposit. The Tribunal ordered a pre-deposit of Rs. 10,00,000 based on a previous case involving RAMCO Cements Ltd., the recipient of service.
5. The appellant challenged the pre-deposit order before the High Court, arguing that they were not liable to pay service tax on transportation charges and had produced relevant records before the Tribunal.
6. The High Court noted that the Tribunal had considered the evidence and upheld the pre-deposit order based on the recipient of service being liable for the tax. The Court found no grounds to modify the Tribunal's decision and dismissed the appeal.

This detailed analysis of the judgment highlights the issues, arguments presented, decisions made at different levels, and the final ruling by the High Court, providing a comprehensive understanding of the legal proceedings involved.