2014 (7) TMI 667 - HC - Service Tax

Waiver of pre deposit - Demand of service tax - Imposition of penalty and interest - Held that - if the petitioner is directed to deposit the demand of service tax with interest as pre-deposit and penalty imposed under Sections 75A, 78, 76 of Chapter V of the Act is waived and the appeal is decided and disposed on its own merits, it will meet the ends of justice. We apprehend that if the petitioner deposits the entire amount with penalty imposed under Sections Sections 75A, 78, 76 of Chapter V of the Act, it would cause undue hardship to the petitioner. - However, parties do not invite any further reasoned order if the tribunal is directed to decide the appeal preferred by the petitioner on deposit of the entire demand of service tax with interest as pre-deposit and the penalty imposed under Sections Sections 75A, 78, 76 of Chapter V of the Act is waived. Impugned order passed by the tribunal dated 29/11/2013 dismissing the appeal preferred by the petitioner is hereby quashed and set aside and it is directed that, on deposit of the entire demand of service tax i.e. ₹ 5,53,367/- with interest levied by the original authority while passing the Order in Original as pre-deposit within a period of eight weeks from today, the tribunal is directed to decide and dispose of the appeal preferred by the petitioner in accordance with law and on its own merits. The deposit of penalty imposed under Sections Sections 75A, 78, 76 of Chapter V of the Act is hereby waived - Decided conditionally in favour of assessee.

Summary

Issues:
Petition to quash orders of Customs Excise Service Tax Appellate Tribunal; Non-compliance with pre-deposit order; Appeal dismissal due to non-deposit; Waiver of penalty; Deposit of service tax with interest as pre-deposit; Appeal to be decided on merits.

Analysis:
The petitioner filed a petition under Article 226 of the Constitution of India seeking to quash orders of the Customs Excise Service Tax Appellate Tribunal. The tribunal had dismissed the petitioner's appeal against the Order in Appeal passed by the Commissioner due to non-deposit of the pre-determined amount. The original authority had confirmed a service tax demand and imposed penalties under relevant sections of the Finance Act, 1994. The petitioner had appealed to the Commissioner, who dismissed the appeal for non-compliance with a pre-deposit order. Subsequently, the petitioner approached the tribunal, which directed further deposits, leading to the dismissal of the appeal for non-compliance. The petitioner then moved the High Court challenging the tribunal's decision.

During the hearing, it was argued that requiring the petitioner to deposit the entire amount with penalties would cause undue hardship. The Court, after considering the submissions, directed the petitioner to deposit the service tax amount with interest as pre-deposit within eight weeks. The Court waived the penalties imposed under relevant sections of the Act. The appeal was to be decided on its merits by the tribunal once the deposit was made, ensuring justice is served without undue hardship to the petitioner.

The High Court, in its judgment, quashed the tribunal's order dismissing the appeal and directed the tribunal to decide the appeal on its merits upon the petitioner's compliance with the service tax deposit within the specified timeline. The waiver of penalties was also ordered by the Court. The decision aimed to ensure a fair hearing for the petitioner without imposing excessive financial burdens, balancing the interests of all parties involved.