2009 (1) TMI 177 - AT - Service Tax

Business Auxiliary Services - The appellants undertook dressing and assembly of tabular knitting pins and accessories using inputs supplied by the principal Needle Industries (India) Pvt. Ltd. Nilgiris. At the instance of the department, the appellants paid the entire amount of service tax of Rs. 10,036 along with interest for the delay in payment, tentatively held to be due on the activity. The original authority imposed equal amount of penalty both under sections 76 and 78 of the Act while confirming the demand. The impugned order in appeal has been passed for failure of the appellants to make pre-deposit ordered by the Commissioner (Appeals). He had directed the appellants to pay an amount of Rs. 10,058 for hearing their appeal - As the appellants had paid the entire service tax and interest for the delay in its payment, in the normal course, the appeal should have been heard without insisting on pre-deposit of the penalties imposed. Case Remanded

Summary

The Appellate Tribunal CESTAT, CHENNAI, in the case of M/s. Vivek Enterprises, considered a request for a waiver of pre-deposit and stay of recovery of penalties imposed under the Finance Act, 1994. The penalties were due to the appellant's failure to comply with statutory formalities, including payment of service tax for services classified under 'Business Auxiliary Service' provided between 10-9-2004 and 28-2-2005. The appellants performed 'dressing and assembly of tabular knitting pins and accessories' using materials supplied by Needle Industries (India) Pvt. Ltd. Nilgiris. The entire service tax amount of Rs. 10,036, along with interest, was paid by the appellants following a departmental request. The original authority upheld the demand for service tax and interest, as well as imposed penalties under sections 76 and 78 of the Act. The appeal against this decision was heard by the Commissioner (Appeals), who ordered a pre-deposit of Rs. 10,058 to proceed with the appeal.

During the hearing, the appellant's consultant argued that they were eligible for an exemption under Notification No. 14/04, dated 10-9-2004, which specified that service tax was only applicable to service providers falling under certain categories. The appellants claimed they did not fall under any of the listed categories, being a small enterprise with less than 10 employees and not registered as a factory under the Factories Act, 1948. They also contested the pre-deposit amount set by the lower appellate authority and argued that the impugned order was issued without allowing them to present their case in person. The Tribunal considered the arguments of both sides and decided to dismiss the stay application, proceeding with the appeal. It was noted that the original authority had not properly addressed the challenge to the service tax and penalties imposed, and as the appellants had already paid the full tax and interest, the appeal should have been heard without requiring additional pre-deposits. Consequently, the case was remanded to the Commissioner (Appeals) with instructions to adjudicate the appeal on its merits without insisting on further pre-deposits. The appeal was allowed by way of remand.