2017 (10) TMI 30 - HC - Service Tax

Seeking Credit of pre-deposit made during the earlier round of appeal with the second round of appeal - Non-payment of service tax - case of the appellants is that substantial period of alleged non-payment of service tax overlapped between the two show cause notices - Held that - once the Tribunal set aside the orders passed by the adjudicating authority and by its order dated 07.10.2015 remanded the proceedings for fresh consideration and disposal by the said authority, no demand survived against the agency or the Company in connection with the said proceedings. In that view of the matter, the department cannot hold on to the pre-deposit made by the noticees - It is an undisputed position that by way of pre-deposit the Company had deposited a sum of ₹ 32 lakhs before the department during the pendency of appeal before the Tribunal and the agency had deposited a sum of ₹ 43 lakhs. These amounts would have to be given credit to the appellants for the purpose of fulfillment of the pre-deposit requirement as per the present statutory provisions for maintaining their appeals before the Tribunal - The tax appeals of the appellants, agency as well as the Company, before the Tribunal are revived.

Summary

Issues:
1. Overlapping service tax demands due to two separate show cause notices.
2. Validity of pre-deposit made by the noticees during the appeal process.
3. Applicability of pre-deposit requirements under the Central Excise Act.
4. Decision on the appeals filed by the appellants before the Tribunal.

Analysis:

1. The case involved two tax appeals by a security agency and an incorporated company with common management and control. The appeals stemmed from investigations into alleged service tax breaches at the Hyderabad and Surat offices of the entities. The appellants argued that overlapping demands arose due to two show cause notices covering the same period. The Tribunal remanded the proceedings for fresh consideration, leading to subsequent adjudication by the Surat Commissioner on the Hyderabad show cause notices.

2. The Tribunal dismissed the appeals due to non-fulfillment of pre-deposit requirements mandated by amendments in the Central Excise Act. The appellants contended that the overlapping demands were not raised before the lower authorities, and no appearance was made during the hearing. However, the Tribunal found it challenging to verify the veracity of the overlapping demands due to lack of information.

3. Upon review, the High Court emphasized that once the Tribunal remanded the proceedings for fresh consideration, no demand remained against the appellants. Therefore, the pre-deposit made by the noticees should be returned unless specified otherwise. The Court directed the pre-deposit amounts made by the Company and the agency to be credited for maintaining their appeals before the Tribunal, with any shortfall to be rectified by a specified date.

4. Consequently, the High Court set aside the Tribunal's order and revived the tax appeals of the appellants. The Tribunal was instructed to decide on the appeals based on merits, contingent upon the appellants depositing any deficient pre-deposit amounts within the stipulated timeframe. The Court disposed of both tax appeals accordingly, ensuring compliance with the statutory provisions for pre-deposit requirements.

In conclusion, the High Court's judgment addressed the issues of overlapping service tax demands, pre-deposit validity, compliance with the Central Excise Act, and the revival of tax appeals before the Tribunal, providing clarity on the treatment of pre-deposit amounts and the necessity for fulfilling statutory requirements.