2014 (4) TMI 405 - HC - Service Tax

Waiver of pre deposit - Whether Tribunal is justified to order to deposit whole amount of tax and interest? - Held that - appellant has been required to predeposit ₹ 9.5 lacs plus the proportionate interest on ₹ 27.54 lacs excluding the component of penalties out of demand of duty of ₹ 27.54 lacs and equal amount of penalty which is reasonable and justified - no substantial question of law arises in this appeal - However, time period to make pre deposit is extended - Decided partly in favour of assessee.

Summary

Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 against the order of the Tribunal.
2. Substantial questions of law raised regarding the Tribunal's order to deposit tax and interest.
3. Justification of the Tribunal's order for pre-deposit and stay applications.

Analysis:
1. The appellant, a Government contractor engaged in construction, appealed against the Tribunal's order directing a pre-deposit of Rs. 9.5 lacs along with interest on the total service tax liability of about Rs. 27.54 lacs. The Tribunal justified the pre-deposit based on the appellant's non-compliance with service tax rules post-2007, despite finding a prima facie case for waiver of pre-deposit and stay of proceedings until final hearing. The Tribunal's decision was upheld by the High Court, dismissing the appeal due to the reasonableness and justification of the pre-deposit requirement.

2. The Tribunal's order to deposit the sum was based on the appellant's failure to avail benefits under the Composition Scheme 2007 Rules and the absence of overt conduct for exemption under Rule 2007. The Tribunal balanced the prima facie case and the convenience to grant waiver of pre-deposit, subject to the appellant remitting the specified amount within 8 weeks. The High Court found the pre-deposit amount reasonable and justified, leading to the dismissal of the appeal.

3. The High Court extended the time for the appellant to deposit the required amount as directed by the Tribunal, emphasizing the importance of complying with the pre-deposit condition for the appeal to be heard on merits. The decision highlighted the significance of meeting the Tribunal's directives within the stipulated timeline to proceed with the appeal process effectively and in the interest of justice.