2014 (1) TMI 259 - AT - Service Tax

Demand of service tax - Jurisdiction of Commissioner (Appeals) - Power to reject appeal - Held that - There is no provision either in Chapter V of the Finance Act, 1944 nor provision of the Central Excise Act, 1944 which accommodates a power in the Commissioner (Appeals) (or for that matter in this Tribunal) to review an order of predeposit passed, even if there be some error in such order. In the circumstances, the Commissioner (Appeals) had no jurisdiction to entertain an application for review which is presented either as a letter or even a formal application. An application for review of an order of predeposit, in whatsoever phraseology such an application is couched must be summarily rejected as without jurisdiction; unless such order (directing predeposit) is itself a nullity for any reason of lack of inherent jurisdiction of the officer passing the order or like circumstances - Commissioner (Appeals) ought to have rejected the appeal solely on the ground of failure of predeposit, one of the grounds adverted to in the impugned order. The impugned order, to the extent it proceeded to reject the appeal on merits as well, is however unsustainable; as the jurisdiction of the Commissioner to decide upon merits of the appeal is contingent upon predeposit - However the order rejected the appeal for failure of predeposit, is impeccable and sustained.

Summary

Issues:
1. Assessment of service tax liability invoking extended period of limitation.
2. Appeal for waiver of predeposit and subsequent failure to comply.
3. Commissioner's decision on appeal grounds and predeposit non-compliance.
4. Jurisdiction of Commissioner to review predeposit order.

Analysis:
1. The case involved the assessment of service tax liability amounting to Rs.34,09,148/- along with interest and penalties for providing taxable services from May 2006 to March 2010. The order invoking the extended period of limitation under Section 73(1) of the Act was challenged by the appellant through an appeal.

2. The appellant sought a waiver of predeposit, but the appellate Commissioner, after a personal hearing, ordered the appellant to deposit 50% of the assessed tax and penalty within a specified period. Failure to comply would render the appeal liable for rejection under Section 35F of the Central Excise Act, 1944. Despite a request for reconsideration, the appellant failed to deposit the required amount.

3. The Commissioner (Appeals) decided to rule on the appeal's merits while also considering the appellant's request for a review of the predeposit order. The order concluded that there was no error in the adjudication order and that the application for reconsideration lacked merit. Consequently, the appeal was rejected for non-compliance with predeposit requirements and on its merits. The appellant argued financial hardship prevented predeposit and that a personal hearing was not granted before the appeal's dismissal.

4. The Tribunal found that there was no provision for the Commissioner (Appeals) to review a predeposit order under the relevant acts, unless the order itself lacked jurisdiction. The Commissioner's jurisdiction to decide on the appeal's merits was contingent upon predeposit compliance. The Tribunal set aside the Commissioner's order regarding the appeal's merits but upheld the rejection based on predeposit non-compliance. The appeal was disposed of accordingly.