2016 (1) TMI 483 - HC - Service Tax

Waiver of pre-deposit - Tribunal directed the appellant to deposit entire amount of service tax to entertain the appeal amounting to ₹ 26,59,784/- - whether the amount of pre-deposit as directed by the Tribunal was unfair and excessive - works contract - contract of cleaning various parts of M/s Guru Gobind Singh Super Thermal Plant - Held that - appellant has already deposited a further sum of ₹ 6,70,252/-, as per order dated 15.12.2015, the present appeal is disposed of by making the interim order dated 15.12.2015 absolute. The Tribunal is directed to hear the appeal on merits without insisting for any further deposit.

Summary

Issues:
1. Quantum of pre-deposit under Section 35G of the Central Excise Act, 1944 for hearing of appeal by Tribunal.

Analysis:
The appellant filed an appeal under Section 35G of the Central Excise Act, 1944 against the order of the Customs Excise and Service Tax Appellate Tribunal directing the deposit of the entire service tax amounting to Rs. 26,59,784 as a pre-deposit. The appellant entered into a cleaning contract with a thermal plant in 2005, where the service recipient was required to pay service tax. However, the appellant did not collect or pay service tax based on the understanding that the cleaning activities were not taxable as confirmed by the thermal plant authorities. Despite this, a show cause notice was issued for payment of service tax amounting to Rs. 34,19,607 for the period June 2005 to March 2010. The appellant appealed against this demand, and after various proceedings, the Tribunal directed the appellant to deposit the entire service tax amount as a pre-deposit. The appellant argued that the pre-deposit amount was excessive, but had already deposited a sum of Rs. 6,70,252. The revenue opposed this, stating that the Tribunal's decision was correct. The High Court, considering the facts and the appellant's deposit, directed the Tribunal to hear the appeal on merits without insisting on any further deposit, making the interim order absolute.

This case primarily dealt with the issue of the quantum of pre-deposit to be made by the appellant as a condition for the hearing of the appeal by the Tribunal under Section 35G of the Central Excise Act, 1944. The appellant had entered into a cleaning contract with a thermal plant, where the service tax was disputed. Despite contentions that the cleaning activities were not taxable, a show cause notice was issued for a significant amount of service tax. The appellant appealed against this demand, and after a series of proceedings, the Tribunal directed the appellant to deposit the entire service tax amount as a pre-deposit. The High Court, considering the appellant's deposit of a substantial sum and the overall circumstances, disposed of the appeal by making the interim order absolute, directing the Tribunal to proceed with hearing the appeal on merits without requiring any further deposit.