2008 (7) TMI 31 - AT - Service Tax

Dismissal of appeal for non-compliance of the stay order appellant contend that demand has been made on the basis of income shown in the balance sheet and the service tax is liable to be paid on the amount actually received for rendering the service, whereas in the balance sheet, accrued income is shown - appellant have made out a prima facie case in their favour and therefore, pre-deposit of duty, penalty etc. is waived

Summary

Issues:
- Non-compliance with stay order for payment of Service Tax demand
- Observance of principles of natural justice by Commissioner (Appeals)
- Requirement of pre-deposit amount for stay application

Analysis:
1. Non-compliance with stay order for payment of Service Tax demand:
The appellant's appeal was rejected by the Commissioner (Appeals) due to non-compliance with the stay order, which required the appellant to pay 75% of the confirmed Service Tax demand of Rs.37,000. The appellant argued that the demand was based on accrued income shown in the balance sheet, while service tax should only be paid on the amount actually received for services rendered. The appellant claimed to have informed the Commissioner (Appeals) about discrepancies in the amount received compared to the invoices raised. However, the Commissioner (Appeals) did not consider these submissions before rejecting the appeal.

2. Observance of principles of natural justice by Commissioner (Appeals):
The Tribunal found that the Commissioner (Appeals) did not adhere to principles of natural justice in issuing the stay order or the final order. It was emphasized that it is crucial to assess whether the appellant has a prima facie case before rejecting a stay application or determining the pre-deposit amount. The Tribunal noted that the appellant had presented detailed submissions, but the Commissioner (Appeals) did not provide any observations on these submissions before requiring the payment of 75% of the service tax and penalty.

3. Requirement of pre-deposit amount for stay application:
The Tribunal concluded that the appellant had established a prima facie case in their favor and decided to waive the pre-deposit of duty, penalty, etc. The Tribunal directed the Commissioner (Appeals) to hear the appeal without insisting on any pre-deposit amount and remanded the case for further disposal, ensuring that the appellants have the opportunity to represent their case effectively. This decision was based on the lack of consideration of the appellant's submissions and the need to uphold principles of natural justice in the proceedings.