2008 (2) TMI 167 - AT - Service Tax

C&F agent - remand order of this Bench is under challenge before the Hon ble High Court in the mean time lower appellate authority confirmed demand & penalty on assessee assessee contend that their plea for limitation & applicability of sec. 80 to waive penalty, was not considered by lower appellate authority considering the evidences, held that party has made out prima facie case against the demand, on the ground of limitation hence stay is partly granted

Issues:
1. Denial of natural justice to the assessee.
2. Time-barred demand of service tax.
3. Validity of plea for waiver of pre-deposit and stay of recovery.
4. Challenge to remand order before the High Court.
5. Assessment of the plea of limitation for the limited purpose of Section 35F of the Central Excise Act.

Analysis:

1. Denial of Natural Justice:
The lower appellate authority confirmed a demand of service tax against the appellants, along with penalties, despite the party's appeal against the previous order being pending before the High Court. The party claimed that natural justice was denied as they were not heard before the impugned order was passed. The counsel argued that the demand was time-barred due to lack of evidence of intent to evade payment of service tax, as the party had sought clarification from the department since 2001 regarding the tax liability on commissions. The party also highlighted a decision by the Tribunal's Larger Bench favoring them on the substantive issue.

2. Time-Barred Demand of Service Tax:
The party contended that the demand raised in the show-cause notice dated 7-7-2003 for the period September 1999 to February 2003 was time-barred. They argued that the confusion caused by the lack of clarification from the department regarding the tax liability on commissions collected prevented them from evading payment intentionally. However, the Tribunal found that the party did not establish a prima facie case against the demand based on limitation grounds.

3. Validity of Plea for Waiver of Pre-deposit and Stay of Recovery:
The counsel for the party requested waiver of pre-deposit and stay of recovery or, alternatively, for remand of the case. The Tribunal directed the party to pre-deposit a specific amount within a stipulated time frame for further consideration.

4. Challenge to Remand Order Before the High Court:
The remand order of the Tribunal was challenged before the High Court, but the party had not obtained a stay of operation of the remand order at the time of the hearing. The Tribunal acknowledged the challenge but proceeded with the assessment based on the current circumstances.

5. Assessment of the Plea of Limitation for the Limited Purpose of Section 35F:
The Tribunal considered the party's plea of limitation for the limited purpose of Section 35F of the Central Excise Act. Despite the correspondence between the party and the department regarding the tax liability, the Tribunal found that the party had not presented sufficient evidence to establish a prima facie case against the demand based on limitation grounds.

In conclusion, the Tribunal addressed the various issues raised by the parties, including natural justice, time-barred demand of service tax, validity of pleas, challenge to the remand order, and the assessment of limitation grounds, providing a detailed analysis and directions for further proceedings.

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