2013 (9) TMI 837 - HC - Service Tax

Demand - Stay of recovery - Amalgamation of company - Held that - no substantial questions of law raised by the Central Excise department, namely that the CESTAT had erred in granting stay to the respondent dispensing with the condition of pre-deposit of service tax, interest and penalty on the ground that there was no suppression or mis-statement on the part of respondent to irregularly avail the credit with any malafide intention and the demand raised by invoking the extended period of limitation, arises from the facts of the case and requires consideration of the Court - Decided against Revenue.

Summary

Issues:
Central Excise Appeal under Section 35-G of Central Excise Act, 1944 - Dispensing with the condition of pre-deposit of service tax, interest, and penalty during the pendency of the appeal.

Analysis:
The case involves a Central Excise Appeal under Section 35-G of the Central Excise Act, 1944, arising from an order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (CESTAT). The Tribunal allowed the respondent-party's application for dispensing with the condition of pre-deposit of service tax, interest, and penalty and stay of recovery during the pendency of the appeal. The Tribunal based its decision on the fact that the appellant had availed the credit of service tax paid by M/s Ghari Industries on franchisee services during a period when the application for amalgamation of two units was pending before the Allahabad High Court. The amalgamation was allowed retrospectively, and the service tax had been paid during the same period, leading the Tribunal to conclude that the demand from the appellant was not justified. Additionally, the Tribunal found that the demand was also barred by limitation.

The Central Excise department raised substantial questions of law challenging the Tribunal's decision to grant stay to the respondent, dispensing with the condition of pre-deposit of service tax, interest, and penalty. The department contended that there was no suppression or misstatement on the part of the respondent in availing the credit, and the demand was raised invoking the extended period of limitation. However, the Court did not find merit in the department's arguments and dismissed the Central Excise Appeal. The Court held that the issues raised by the department required consideration based on the facts of the case, indicating that the Tribunal's decision was well-founded and did not warrant interference.

In conclusion, the High Court upheld the decision of the Tribunal to allow the respondent's application for dispensing with the pre-deposit condition of service tax, interest, and penalty during the appeal. The Court found that the appellant was entitled to the credit of service tax paid during the period in question and that the demand from the appellant was not justified, further noting that the demand was also time-barred. The dismissal of the Central Excise Appeal signifies the Court's affirmation of the Tribunal's decision in favor of the respondent.