2014 (2) TMI 864 - HC - Service Tax

Appeal against and order dismissing the appeals on the ground that the assessee did not comply with the condition of pre-deposit as imposed in the order dated 05.08.2013. - providing ground handling services to M/s.Sri Lankan Airlines Pvt. Ltd., and other non-scheduled airlines. - held that - Prima facie the conduct of the assessee appears to be not in accordance with law, since they are bound to remit the service tax collected from the customers within the time prescribed under the Finance Act. Having not done so, the Adjudicating Authority has levied interest and penalty. The levy of interest being automatic, the assessee cannot be granted any indulgence on the said aspect. Assessee directed to make pre-deposit of entire interest amount and penalty amount of Rs. 10 lakh instead of Rs. 25 lakhs - order of tribunal modified.

Summary

Issues:
1. Compliance with pre-deposit condition for appeal.
2. Liability for payment of service tax, interest, and penalty.
3. Adequacy of pre-deposit amount for penalty.

Analysis:
1. The judgment pertains to Civil Miscellaneous Appeals challenging orders dismissing appeals due to non-compliance with the pre-deposit condition. The appellant, providing ground handling services, faced a tax demand for a specific period. The Tribunal required pre-deposit of penalty and interest, considering the appellant's collection of service tax but delayed remittance. Failure to comply led to dismissal of appeals.

2. The Court noted the appellant's failure to adhere to tax remittance timelines, resulting in interest and penalty levies. The Tribunal upheld the requirement to pay interest in full for specified show cause notices. Regarding penalty, the appellant's lack of response to notices led to the original authority's decision and subsequent demand. The Court modified the penalty amount to Rs.10,00,000 from Rs.25.00 lakhs, emphasizing the need for compliance within eight weeks.

3. In addressing the adequacy of the penalty pre-deposit, the Court acknowledged the appellant's payment of the entire service tax and interest for one notice. Considering these payments and the appellant's obligations, the Court directed a reduced penalty pre-deposit. The judgment confirmed the Tribunal's decision with the modified penalty amount, ultimately disposing of the Civil Miscellaneous Appeals without costs and closing related petitions.