2015 (4) TMI 130 - HC - Service Tax

Restoration of appeal - Appeal dismissed for non compliance of pre deposit order - Whether the Tribunal was justified in dismissing the appeal on account of the failure of the appellant to deposit the amount of 50 lacs inspite of the fact that sufficient cause had been shown that the appellant was not undertaking any cleaning service and was only lifting the fly ash for M/s National Fertilisers Ltd. - Held that - After hearing counsel for the parties and keeping in view the fact that out of the total demand of service tax of 74, 88, 396/- raised the Tribunal itself has given benefit of 21, 49, 623/- and therefore the penalty element also would not be payable. Similarly keeping in view the fact that a Co-ordinate Bench of the Tribunal has prima facie held in similar circumstances that the mechanical process of removing fly ash does not fall within the ambit of service tax the appellant is not liable to deposit 29, 60, 791/- on the said head along with the penalty which has been levied. - appeal was not liable to be dismissed on account of noncompliance of the earlier order dated 06.05.2013. Accordingly the stay order dated 02.09.2013 (Annexure A-6) is set aside - Decided in favour of assessee.

Summary

Issues involved:
- Dismissal of appeal for failure to pre-deposit service tax amount
- Justification for dismissing the appeal
- Contention regarding cleaning service and removal of fly ash
- Demand of service tax under different heads
- Confirmation of demand by Commissioner, Central Excise
- Tribunal's order for pre-deposit and compliance
- Application for reduction of pre-deposit amount
- Tribunal's dismissal of application for review
- Reduction of demanded amount by the court
- Setting aside the stay order and allowing the appeal

Dismissal of Appeal for Failure to Pre-Deposit Service Tax Amount:
The appeal was filed under Section 35 G of the Central Excise Act, 1944 against an order dismissing the appeal due to the failure to pre-deposit the amount as directed by an earlier order. The main issue was whether the Tribunal was justified in dismissing the appeal for not depositing Rs. 50 lacs despite the appellant's claim that they were not providing cleaning services but only lifting fly ash for a specific entity.

Contention Regarding Cleaning Service and Removal of Fly Ash:
The appellant contested a show cause notice demanding service tax under various categories, including cleaning service, management maintenance, repair service, and construction services. The appellant argued that the process of removing fly ash by mechanical means did not constitute a cleaning service, citing a similar case from the Eastern Bench of the Tribunal.

Confirmation of Demand by Commissioner, Central Excise:
The Commissioner confirmed the demand of Rs. 74,88,396 under the Finance Act, 1994, and ordered recovery of interest and penalty. The Tribunal disagreed with the Commissioner's reasoning on construction services but required the appellant to pre-deposit Rs. 50 lacs within a specified time frame.

Reduction of Demanded Amount by the Court:
The court considered the appellant's arguments and previous Tribunal decisions, concluding that the appellant was not liable to deposit a portion of the demanded amount related to cleaning services and associated penalties. The court set aside the stay order and directed the Tribunal to hear the appeal without requiring the pre-deposit for cleaning services but maintained the requirement for other categories.

Setting Aside the Stay Order and Allowing the Appeal:
Based on the analysis, the court allowed the appeal, setting aside the stay order that required pre-deposit of the service tax amount. The Tribunal was instructed to proceed with the appeal without the need for pre-deposit under the cleaning service category, acknowledging the appellant's arguments and the specific circumstances of the case.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by the parties, decisions made by the authorities, and the final outcome of the case.