2017 (8) TMI 1229 - HC - Service Tax

Pre-deposit - security agency service - Held that - the appeal has been dismissed only because of certain circulars issued by the department which mandate that the pre-deposit of 10% of the adjudicated liability should be paid before decision of the appeal on merits. In this case the assessee is the Superintendent of Police of District Burhanpur and he claims the benefit based on certain judgments already rendered by the same Tribunal where the appeal was pending - it was a fit case where by granting exemption from deposit of the pre-deposit amount the appeal could be considered on merits - we remand the matter back to the Tribunal for reconsideration and to decide the appeal on merits without insisting upon payment of pre-deposit amount - appeal allowed by way of remand.

Summary

Issues:
Challenge to imposition of Service Tax under Section 65(105)(w) of the Finance Act, 1994 based on non-payment of pre-deposit amount.

Analysis:
The appeal before the High Court challenged the imposition of Service Tax under Section 65(105)(w) of the Finance Act, 1994. The Superintendent of Police of District Burhanpur filed the appeal, contending that the Tribunal had dismissed the appeal due to non-payment of the pre-deposit amount. The appellant relied on a judgment by the Tribunal at New Delhi in the case of Deputy Commissioner of Police Department of State of Rajasthan v. CCE, which held that the service in question, i.e., undertaking security agency service, is not liable for Service Tax by the Police Department in the State of Rajasthan. The appellant argued that based on this judgment, the appeal should be allowed on merits.

Upon reviewing the impugned order and hearing arguments from both parties, the High Court noted that the appeal had been dismissed primarily due to circulars issued by the department requiring a pre-deposit of 10% of the adjudicated liability before deciding the appeal on merits. The assessee, the Superintendent of Police, sought exemption from the pre-deposit based on previous judgments of the same Tribunal. The High Court considered the circumstances, including the fact that the appellant was a department of the State Government and there was an existing order by a coordinate Bench of the same Tribunal on a similar issue.

In light of these considerations, the High Court allowed the appeal and remanded the matter back to the Tribunal for reconsideration. The High Court directed the Tribunal to decide the appeal on merits without insisting on the payment of the pre-deposit amount. The High Court emphasized the peculiar facts and circumstances of the case, particularly the appellant's position as the Head of Police Department of the District and the existence of a relevant order by a coordinate Bench of the same Tribunal.

As a result, the High Court disposed of the appeal by granting exemption from the pre-deposit requirement and instructing the Tribunal to reconsider the matter on merits without the need for the pre-deposit amount.