2009 (1) TMI 433 - AT - Service Tax

Pre-deposit- The main grievance raised by the appellants is that they did not realize the differential tax amount from their clients and, hence, did not deposit the same with the Revenue. They had got themselves registered with the department in respect of the taxable service as early as in the year 2003. During the period of dispute (13-5-2003 to 30-9-2006), they returned lesser value for the purpose of payment of service tax, vis-a-vis the correct amounts collected from their clients, which were borne out from their Bank statements. Held that- we set aside the impugned order and allow this appeal by way of remand directing the ld. Commissioner (Appeals) to deal with the assessee s appeal on merits subject to pre-deposit of the differential tax amount by the appellants, which shall be made within a period of 30 days from today. The Appellate Authority shall deal with their appeal on merits as and when the appellants report compliance.

Issues:
1. Appeal against rejection of waiver of pre-deposit by the Commissioner (Appeals).
2. Justification for the direction of pre-deposit by the lower Appellate Authority.
3. Dispute regarding the differential tax amount not collected from clients.
4. Lack of valid grounds for the appellants' case.

Analysis:
1. The appeal before the Appellate Tribunal stemmed from the rejection of the appellant's plea for waiver of pre-deposit by the Commissioner (Appeals). The appellant had failed to pre-deposit the tax amount as directed, resulting in the dismissal of the appeal for non-compliance with section 35F of the Central Excise Act applicable to service tax appeals. The Tribunal noted that the appeal was not against the order on merits but rather focused on the pre-deposit issue.

2. The Tribunal, after hearing both parties, upheld the lower Appellate Authority's decision to direct the appellant to make the pre-deposit. The appellant's main contention was their inability to collect the differential tax amount from their clients, despite being registered with the department for the taxable service. The appellant claimed that the correct amount of service tax could not be paid as they did not receive the full amount from their clients. However, the Tribunal found this argument unconvincing, especially considering the bank statements clearly reflected the correct amounts collected from clients.

3. Despite the appellant's assertion that they could not recover the differential tax amounts from clients, the Tribunal found no valid grounds to support their case. The appellant's registration with the department and the bank statements indicating the correct amounts collected undermined their argument of inability to pay the correct service tax amount. The Tribunal emphasized the lack of substantial grounds in favor of the appellant's position.

4. In light of the above analysis, the Tribunal set aside the impugned order and allowed the appeal by way of remand. The Tribunal directed the Commissioner (Appeals) to reconsider the appellant's appeal on merits, subject to the pre-deposit of the differential tax amount within 30 days. The Appellate Authority was instructed to address the appeal on its merits once the appellants complied with the pre-deposit requirement, emphasizing the need for an independent assessment of the case based on its substantive merits.

← Previous Next →