DISPENSATION OF PRE DEPOSIT OF SERVICE TAX, INTEREST AND PENALTY IN APPEAL BEFORE APPELLATE TRIBUNAL

[Mr. M. GOVINDARAJAN]

Sec. 80 of the Finance Act, 1994 ('Act' for short) provides that any assessee aggrieved by an order passed by-

·  A Commissioner of Central Excise under Sec. 73 or 83A or 84;

·  A Commissioner of Central Excise (Appeals) under Sec. 85

May file appeal to the Appellate Tribunal ('tribunal' for short) against such order within three months from the date on which the order sought to be appealed against is received by the assessee.   This section further provides that the tribunal shall exercise the powers and follow the same procedure as it exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1994.

                        Sec. 35F of the Central Excise Act provides that the person desirous of appealing against the decision or order shall, pending the appeal, deposit with the adjudicating authority the tax demanded or the penalty levied. Wherein any particular case, the tribunal is of the opinion that the deposit of service tax demanded or penalty levied would cause undue hardship to such person the tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the interest of revenue. Such application shall be disposed within thirty days from the date of filing. 

        The dispensation of depositing of service tax or penalty is at the discretion of the tribunal.  It shall satisfy itself for passing such order. Therefore no yardstick can be fixed for exercising such powers by the tribunal. This may be depending upon the facts and circumstances of the cases.  The tribunal may dispense with the payment of tax or penalty in full or in part or may refuse the prayer of the appellant. In this article nearly fifteen case laws are discussed in which the tribunals ordered to dispense with the pre deposit of service tax or penalty in full since they found that prima facie the cases are in favor of the assessees.

CASE LAWS:

1. DIC India Ltd., V. Commissioner of Central Excise, Mumbai - II 2008 -TMI - 30786 - CESTAT MUMBAI 

        Since the credit has been denied on the ground which is not mentioned in the show cause notice prima facie the demand does not appear to be tenable. Accordingly the tribunal waived the pre deposit of the entire service tax, education cess as well as penalty and stay recovery thereof till the disposal of the appeal.

2.  In Re. M/s LSG Sky Chafs (India) Pvt. Ltd., - Stay order No. 309/2008 dt. 29.04.2008

        The dispute involves the service tax liability on the amount received by way of sale of food and beverage to the Airlines. In view of the various decisions cited by the learned Advocate prima facie the case is in favor of the appellants. There is no suppression of facts to invoke the larger period. In view of this the tribunal ordered waiver of pre deposit of the entire tax demanded, interest and also the penalties.

3. Alankar Steel Pvt. Ltd., V. Commissioner of Central Excise, Raipur- 2008 -TMI - 4569 - CESTAT NEW DELHI

        In view of the fact that the credit was denied only on the ground that the same has been availed on TR- 6 challans, pre deposit of service tax and penalty is waived.

4. ZF Steering Gear (India) Pvt. Ltd., V. Commissioner of Central Excise, Pune - III- 2008 -TMI - 4609 - CESTAT, MUMBAI 

        The finding of the Commissioner that the payments have to be apportioned between rendering of services of Consulting engineer and Intellectual property right services, prima facie goes beyond the show cause notice as the proposal in the notice was only for the levy of service tax under the heading Consulting Engineer Services.

5. Sai Shipping Service V. Commissioner of Central Excise, Jaipur - I - 2008 -TMI - 4613 - CESTAT, NEW DELHI

        By the order impugned the Commissioner of Central Excise exercising the suo motu power under Sec. 84 of the Finance Act, 1994 has imposed penalty of Rs.24,18,925/- under Sec. 78 of the Act.  The imposition of penalty for the main demand under Sec. 76 had been stayed. The tribunal is of the view that the main demand and penalty having been stayed the enhancement of penalty under Sec. 78 in exercise of revisional power should also be stayed. Accordingly the amount of pre deposit of penalty is waived till the disposal of the appeal.

6. TNS India Pvt. Ltd., V. Commissioner of Service Tax, Bangalore - 2008 -TMI - 4623 - CESTAT, BANGALORE 

        Prima facie the tribunal found that the Commissioner has not given any finding on time bar for the reason that in the show cause notice, there is no invocation of larger period. Therefore the stay application is allowed by granting waiver of pre deposit of the amount and staying its recovery till the disposal of the appeal.

7. Hydro S&S Industries Ltd., V. Commissioner of Central Excise, Pondicherry  -  2008 -TMI - 4625 - CESTAT, CHENNAI

        In terms of Rule 6(1) of Service Tax Rules, 1994 service tax is payable on the gross amount received by the service provider. In the present case the department has no case that the impugned amount was received by the appellants. In the circumstances the tribunal found that the appellants had made a prima facie case against the demand and penalty.  Accordingly there shall be waiver of pre deposit and stay of recovery in respect of the dues as per the impugned order.

8. Faiveley Transport India Ltd., V. Commissioner of Central Excise, Chennai- 2008 -TMI - 4627 - CESTAT, CHENNAI 

        The show cause notice did not put the appellants on notice as to their exact liability, as the notice did not indicate the category of services where the assessee has received. As rightly pointed by the learned counsel it is a fundamental flaw in the proceedings and consequential demand is not sustainable. The tribunal found that the appellants have made out a prima facie case against the demand and penalties. Accordingly there shall be waiver of pre deposit and stay of recovery of the dues as per the impugned order.

9. Volvo India Ltd., V. Commissioner of Service Tax, Bangalore - 2008 -TMI - 4630 - CESTAT, BANGALORE

        As the service tax has been deposited along with interest, the aspect pertaining to imposition of penalty can be seen at the stage of final hearing. Therefore the stay application is allowed granting waiver of pre deposit and staying recovery.

10. SGS India Pvt. Ltd., V. Commissioner of Service Tax, Mumbai -  2008 -TMI - 4721 - CESTAT, MUMBAI 

        The issue involved in this case is regarding the question of law whether the service tax liability will arise is for the service rendered by the appellant to a foreign party, on whose request the services are rendered. The tribunal found that the entire issue requires a detailed consideration and evaluation of law on the subject. The tribunal found that the issue had wider ramification and may arise all over India, hence needs to be addressed. Pre deposit is waived in this case.

11. Som Distilleries Pvt. Ltd., V. Commissioner of Central Excise, Bhopal - 2008 -TMI - 4740 - CESTAT, NEW DELHI 

        The Revenue submitted that the appellant was bottling of country liquor whereas in the instant case the appellants are also engaged in packaging and labeling activities and therefore that part of activity is covered by the definition of taxable service in the Finance Act, 1994. The activities carried on by the appellant can be dissected in a manner that both excise duty as well as service tax are paid. The tribunal held that the submission of the Revenue is theoretically well founded but the issue is highly debatable and of the view that the benefit should go in favor of the appellants and the requirement of pre deposit, therefore, should be dispensed with.

12. SSI Media India Pvt Ltd., V. Commissioner of Service Tax, Chennai - 2008 -TMI - 4742 - CESTAT, CHENNAI 

        The tax liability had been incurred by a partnership firm. The appellant is a private company. One of the Directors of the company was a partner of the firm which had rendered the taxable service as per the impugned order. As rightly pointed out by the learned Counsel for appellants, the appellants, a limited company cannot be penalized nor any liability of the erstwhile partnership fastened on it for the reason that a partner of the firm which had rendered the impugned service is now a Director of the private listed company. The appellant is a legal entity distinct from the parties of the firm who were liable to pay the tax or suffer the penalty for rendering service without following the statutory formalities. The tribunal found that the appellants have made a prima facie case against the demand and penalties in the impugned order. In the circumstances it is ordered that there shall be complete waiver of pre deposit and stay of recovery of dues as per the impugned order till the disposal of the appeal.

13. Krishna Fabrication Pvt. Ltd., V. Commissioner of Central Excise, Chennai - III - 2008 (9) STR 563 (Tri. Chennai)

        Credit of service tax paid on GTA services utilized for transport of final product to buyer's premises. Credit sought to be disallowed. Conflicting views on impugned issue by various benches of tribunals and issue is pending before Larger Bench.  Pre deposit is waived and recovery thereof is stayed.

14. S.P. Sharma V. Commissioner of Central Excise, Ludhiana -2008 (9) STR 572 (Tri. Del)

        The demand is for providing services as maintenance or repair of property. The appellant has undertaken the job of painting under work contract. In these circumstances the tribunal found the appellant had a strong case in his favor. The pre deposit of amount of service tax and penalty is waived.

15. Raj Trans Stamping (P) Ltd., V. Commissioner of Central Excise, Jaipur - I - 2008 (9) STR 576 (Tri. Del)

        The appellant relied upon the Board's circular dated 27.7.2005 wherein it has been clarified that prior to 16.6.2005, repair or service other than maintenance contract or agreement was not covered under the purview of service tax. In the present case, there is rate contract of repair of transformers. In view of the Board's circular the tribunal found that the applicant has prima facie strong case fit for total waiver of amount of service tax and penalty.