2020 (2) TMI 999 - AT - Service Tax

Maintainability of appeal - non-compliance with the mandatory pre-deposit in terms of Section 35F of Central Excise Act - HELD THAT - The said deposit of ₹ 96,187/- made by the appellant was not in the regular course of their business of providing services. The same was deposited by them subsequently by way of two challans dated 31.03.2015 for an amount of ₹ 72,663/- and another challan dated 13.04.2015 depositing an amount of ₹ 23,524/- - As such, it is seen that the entire service tax deposited is to the tune of ₹ 6,81,817/- and the appellant having confirmed an amount of ₹ 96,187/- has to be held as having pre-deposited the mandatory amount of 7.5% of the amount. Matter remanded to Commissioner (Appeals) for deciding the matter on merits, after giving an opportunity to the appellant to put forth their case - appeal allowed by way of remand.

Summary

Issues:
Mandatory pre-deposit under Section 35F of Central Excise Act.

Analysis:
The Appellate Tribunal noted that the Commissioner (Appeals) rejected the appeal based on the mandatory pre-deposit requirement under Section 35F of the Central Excise Act. The total duty liability of the appellant was ?6,81,817, out of which they had deposited ?96,187 during the investigation. The show cause notice proposed to confirm a demand of ?5,85,630 as the balance amount. The Original Adjudicating Authority confirmed this amount, but the Commissioner (Appeals) observed that the appellant had not deposited 7.5% of the confirmed demand as required.

The appellant argued that the amount of ?96,187 they had deposited should be considered as pre-deposit. However, the Commissioner (Appeals) disagreed, stating that the deposit made during the investigation could not be considered as pre-deposit since the demand was confirmed without taking this deposit into account. The Tribunal carefully considered the submissions and found that the deposit of ?96,187 was not part of the regular business operations of the appellant but was made subsequently through two separate challans.

The Tribunal concluded that the entire service tax amount deposited by the appellant was equivalent to the total demand, including the ?96,187. Therefore, the appellant had indeed pre-deposited the mandatory 7.5% amount. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the Commissioner (Appeals) for a decision on the merits, allowing the appellant to present their case.

This judgment highlights the importance of complying with mandatory pre-deposit requirements under the Central Excise Act and the significance of correctly interpreting and applying such provisions in tax matters. The Tribunal's decision to consider the total amount deposited by the appellant as fulfilling the pre-deposit obligation emphasizes the need for a thorough examination of all relevant factors in determining compliance with statutory provisions.