2016 (1) TMI 1064 - HC - Service Tax

Tribunal dismissed the appeal for non-compliance of the conditional order of stay. - appellant contended that the Tribunal is not justified in passing the impugned order, when, prima facie, the demand itself is not justified, by virtue of the Board s Circular, dated 06.08.2008. - Demand of services tax on loading or unloading activities being provided in relation to GTA service Held that - Despite the request being made, seeking modification of the order of stay, the Tribunal did not consider the same, but only extended the time. When the CENVAT credit was available with the Revenue, which would safeguard the interest, insistence upon the further deposit would cause undue hardship to the appellant and as such, the appellant has established a prima facie case for their claim of waiver of pre-deposit. Though complete waiver cannot be granted, having regard to the demand made by the Department, the Tribunal should have considered the reduction of pre-deposit already ordered, having regard to the availability of CENVAT credit to the extent of ₹ 77,00,000/-. But that has not been done. The appellant shall deposit a sum of ₹ 10,00,000/- (Rupees ten lakhs only) to the credit of the second respondent within a period of four weeks from the date of receipt of a copy of this judgment - on such deposit being made, the Tribunal shall take the appeal - Decided in favor of assessee

Summary

Issues:
Challenging orders passed by CESTAT regarding service tax liability, pre-deposit amount, and dismissal of appeals for non-compliance of conditional order of stay.

Analysis:
The appellant, a transport service provider, contested service tax liability based on the absence of loading/unloading charges in their pricing structure. The Department issued show cause notices for alleged under-reporting of taxable value. Despite the appellant's detailed reply citing non-liability for service tax on transportation services, the Department confirmed a substantial tax demand for the period 2004-2010.

The appellant appealed to CESTAT, seeking waiver of the demanded amount pending appeal. CESTAT directed a pre-deposit of Rs. 1,25,00,000, which the appellant partially complied with. Discrepancies arose regarding the verification of the pre-deposit amount, leading to a notice of dismissal for non-compliance. The subsequent dismissal of the appeal by CESTAT due to non-compliance was challenged by the appellant in the High Court.

The appellant argued against the pre-deposit order, citing limitation on the 2004-05 demand, existing payments, and available CENVAT credit. They contended that the Tribunal's order lacked justification and failed to consider statutory parameters. The Court noted that the dispute over service tax liability and limitation should be addressed before CESTAT, focusing solely on the dismissal for non-compliance.

The Court found the Tribunal's dismissal unjustified, considering the appellant's claim of undue hardship due to the availability of CENVAT credit. The Court set aside the Tribunal's order, directing the appellant to make a further deposit of Rs. 10,00,000 before CESTAT. The Court modified the pre-deposit terms and conditions, allowing the appeal to be heard on its merits expeditiously.

In conclusion, the Civil Miscellaneous Appeals were disposed of with the appellant required to make a specified deposit, enabling the Tribunal to proceed with the appeal's substantive consideration promptly.