2015 (7) TMI 889 - HC - Service Tax

Waiver of pre deposit - Security services - Non compliance with pre deposit order - Held that - Thereafter two affidavits have been filed by counsel of both parties and compliance is reported by the assessee of the order passed by the Tribunal while granting a conditional stay. However, the revenue insists that such a compliance will not in any manner mean that further recurring liability is effaced or wiped out. The argument that neither the liability nor recovery of the sums in relation thereto can be stopped or interfered with merely because, an appeal for earlier period is pending. This court is not required to go into these contentions or any wider controversy simply because in this statutory appeal, this court is only concerned with the correctness of the order passed by the Tribunal. - The statutory mandate is clear. So long as the Parliament has not intervened and to take any steps to amend or clarify the legal position, we are obliged to hold that the Tribunal could not have dismissed the appeal preferred by the assessees without adjudication on merits. Tribunal s order granting conditional stay has been complied with albeit belatedly. We also find that presently the Appellant is facing difficulties on account of the attachment of their bank accounts. They have also found that certain recoveries and from their customers are effected by the revenue directly. - without deciding the legal issue or questions in further details, we quash and set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
1. Dismissal of appeal by Tribunal for non-compliance with stay order conditions.
2. Interpretation of statutory provisions regarding dismissal of appeal.
3. Financial hardship considerations in appeal proceedings.
4. Compliance with conditional stay order.
5. Adjudication of appeal on merits.

Analysis:

1. The Tribunal dismissed the appeal due to the appellant's failure to fully comply with the conditions of the stay order, specifically regarding the deposit of interest along with the service tax amount. The dismissal was based on non-compliance with Section 35F of the Central Excise Act and Section 83 of the Finance Act. The appellant was given the liberty to apply for restoration if compliance was met within eight weeks.

2. The appellant contended that the Tribunal lacked the power to dismiss an appeal for non-compliance with a conditional order, emphasizing that appeals must be adjudicated on merits regardless of such non-compliance. Reference was made to a Supreme Court case supporting this argument.

3. The appellant raised substantial questions of law regarding the dismissal of the appeal, including considerations of financial hardship and the Tribunal's failure to address the appellant's pleas in the stay and modification applications. The appellant highlighted the substantial service tax amount deposited and the financial challenges faced.

4. Upon extensive hearings, the High Court examined the impugned order, relevant statutory provisions, and previous judgments. The compliance with the conditional stay order was belated but eventually reported. The appellant faced difficulties due to bank account attachments and direct recoveries by the revenue from their customers.

5. The High Court found that the Tribunal's order could not be sustained based on the statutory mandate and legal precedents. The impugned order was quashed, and the appeal was restored to the Tribunal for a merit-based decision. Both parties were granted an opportunity to be heard, and the High Court refrained from expressing any opinion on the merits of the controversy.

In conclusion, the High Court set aside the Tribunal's order, restoring the appeal for adjudication on merits. The appellant's financial challenges and compliance efforts were considered, emphasizing the importance of due process and statutory requirements in appeal proceedings.