2017 (8) TMI 163 - HC - Service Tax

Validity of order-in-original - service of SCN - natural justice - Held that - It appears that the final order in appeal has been passed by the Tribunal after the filing of the present appeal. The present appeal was filed against the order passed by the Tribunal directing the appellant to deposit of amount. Be that as it may the appeal was filed against the order in original on contentious issues. The main contention of the appellant is that even the service of Showcause Notice was not made. The order in original is an exparte order. To test the bona fides of the appellant on the last date we had asked the learned Counsel for the appellant as to whether the appellant is ready to deposit the amount as directed by the Tribunal. The learned Counsel on instructions states that the amount as was directed by the Tribunal by way of predeposit would be deposited by the appellant within a reasonable time - Considering the bona fides shown by the appellant we are inclined to exercise discretion in favour of the appellant - appeal allowed.

Summary

Issues involved:
1. Condonation of delay and waiver of pre-deposit of the amount in an appeal before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT).
2. Exercise of discretion by the Tribunal in dismissing the appeal due to non-deposit of the demanded service tax.
3. Legality of the order in original passed by the Tribunal and the service of Showcause Notice.
4. Bona fides of the appellant in complying with the Tribunal's directions for depositing the amount.

Analysis:
1. The appellant filed an appeal before CESTAT along with applications for condonation of delay and waiver of pre-deposit of the amount. CESTAT found the reasons for delay sufficient and condoned it but directed the appellant to deposit the service tax demanded within eight weeks. The appellant failed to deposit the amount, leading to the dismissal of the appeal by CESTAT.

2. The appellant argued that the Tribunal did not exercise discretion judiciously and the order in original was passed ex parte without a reasonable opportunity. The respondent contended that sufficient time was given to deposit the amount, and no illegality was committed by the Tribunal in dismissing the appeal.

3. The High Court noted that the appeal was filed against the order directing the deposit of the amount, which was based on contentious issues including the service of Showcause Notice. The Court, to test the appellant's bona fides, asked if they were ready to deposit the amount, to which the appellant agreed to do within a reasonable time.

4. Considering the appellant's willingness to comply, the Court exercised discretion in favor of the appellant. The Court ordered the appellant to deposit the amount within six weeks, and upon compliance, the appeal would be restored to its original position, emphasizing that the deposit was a condition precedent for setting aside the dismissal of the appeal. The appeal was allowed with no costs imposed.