2012 (11) TMI 44 - AT - Service Tax

Application for waiver of pre-deposit - non-compliance with Section 35F of the Central Excise Act Held that - Payment of over Rs. 32 lakhs prior to issue of show cause notice by appellant for which even their appeals, perhaps, would not have been dismissed for non-compliance with Section 35F of the Act, if reasonable opportunity of being heard was given - the pre-deposit of over Rs. 10 lakhs is found to be sufficient for the learned Commissioner (Appeals) to deal with the assessee s appeals on merits - Impugned order is set aside and request the Commissioner (Appeals) to dispose of the assessee s appeals on merits without insisting on any pre-deposit but after giving them a reasonable opportunity of being heard.

Summary

Issues:
1. Dismissal of appeals by Commissioner (Appeals) for non-compliance with Section 35F of the Central Excise Act.
2. Alleged payment of over Rs. 32 lakhs towards service tax and interest prior to the show-cause notice issuance.
3. Handling of modification application by Commissioner (Appeals) without giving a reasonable opportunity of being heard.

Issue 1: The appeals were dismissed by the Commissioner (Appeals) due to non-compliance with Section 35F of the Central Excise Act. The original authority demanded service tax and education cess from the assessee, imposing penalties and appropriating an earlier payment. The appellant requested waiver of pre-deposit, but the Commissioner (Appeals) dismissed the application without a hearing. The appellant claimed to have paid over Rs. 32 lakhs before the show-cause notice, which was not brought to the authorities' attention. The Tribunal found that the dismissal was hasty, lacking a reasonable opportunity for the appellant to present evidence. Consequently, the Tribunal set aside the impugned order and remanded the case for further review.

Issue 2: The appellant claimed to have paid over Rs. 32 lakhs towards service tax and interest before the issuance of the show-cause notice. However, this claim was not presented to the original or first appellate authorities. The Tribunal acknowledged the appellant's grievance regarding the handling of their modification application by the Commissioner (Appeals). Despite the lack of prior disclosure, the Tribunal found merit in the appellant's case and criticized the haste in dismissing the appeals. The Tribunal noted that a reasonable opportunity to be heard could have allowed the appellant to present the payment details, potentially avoiding the non-compliance issue under Section 35F of the Act.

Issue 3: The Commissioner (Appeals) handled the modification application without providing a fair opportunity for the appellant to be heard. The Tribunal observed that the modification application contained substantive submissions that warranted consideration. Notably, the Commissioner (Appeals) did not allow the appellant to present the alleged payment of over Rs. 32 lakhs, which could have influenced the outcome of the appeals. The Tribunal deemed the pre-deposit of over Rs. 10 lakhs as sufficient for the Commissioner (Appeals) to review the appeals on their merits. Consequently, the Tribunal set aside the impugned order and directed the Commissioner (Appeals) to reexamine the appeals without insisting on any pre-deposit but after affording the appellant a reasonable opportunity to present their case.

In conclusion, the Tribunal found that the dismissal of the appeals for non-compliance with Section 35F was hasty and lacked a fair opportunity for the appellant to present crucial payment details. The Tribunal emphasized the importance of providing a reasonable hearing and directed the Commissioner (Appeals) to reconsider the appeals on their merits without requiring any pre-deposit.