2008 (10) TMI 330 - AT - Service Tax

GTA services- Notification No. 32/2004-ST- Appellant submits that they had paid an amount of Rs. 12,23,866 and Rs. 24,476 calculated at 25 per cent on value of service rendered by GTA along with interest amount of Rs. 2,63,588. However, the Commissioner directed them to deposit another 25 per cent which is not justified. It is his submission that the appellants exported iron ore and for onward export engaged goods transport agency for transport to port of origin. It is submitted that appellants were under bona fide belief that there was no need to pay any service tax since the transport was engaged in the course of export of goods and the payment was received in foreign currency from importer. It is submitted that they have communicated to the department seeking clarification. Held that- the appellants have already deposited 25 per cent of duty and interest. Therefore, it is sufficient for the purpose of hearing the appeal. Hence, we set aside the impugned order and remand the case to Commissioner (Appeals) to decide on merits without insisting on further deposit within four months from the date of receipt of this order by following the principles of Natural Justice.

Summary

Issues: Stay and appeal regarding non-compliance with interim order for pre-deposit of service tax under section 35F.

The judgment by the Appellate Tribunal CESTAT, Bangalore involved a case where the Commissioner (Appeals) had dismissed an appeal against an order for non-compliance with an interim order directing the appellants to pre-deposit 25% of the confirmed demand of service tax under section 35F of the Act, 1944. The appellants had paid 25% of the tax as per an exemption notification but were directed to deposit another 25% by the Commissioner. The appellants argued that they were under the belief that no service tax was required as they were exporting iron ore and receiving payment in foreign currency. The Tribunal noted that the appellants had already deposited 25% of the duty and interest and were justified in their belief. The Tribunal set aside the impugned order and remanded the case to the Commissioner to decide on merits without insisting on further deposit, emphasizing the principles of Natural Justice to be followed within four months from the date of the order.

In this judgment, the issue of non-compliance with an interim order for pre-deposit of service tax under section 35F was central. The Tribunal considered the appellant's argument that they were under a bona fide belief that no service tax was required due to the nature of their export activities. The Tribunal found merit in the appellant's position as they had already deposited 25% of the duty and interest, which was deemed sufficient for the appeal hearing. The Tribunal emphasized the importance of considering the appellant's belief and remanded the case to the Commissioner for a decision on merits without requiring further deposit, stressing the application of Natural Justice principles.

Overall, the judgment highlighted the importance of considering the circumstances and beliefs of the parties involved in tax disputes. It emphasized the need for a fair and just decision-making process, especially when dealing with pre-deposit requirements for appeals. The Tribunal's decision to set aside the order and remand the case for a fresh decision underscored the significance of upholding principles of Natural Justice and ensuring a thorough examination of the facts before imposing additional financial burdens on appellants.