2021 (12) TMI 1269 - AT - Service Tax

Maintainability of appeal - pre-deposit of the amount of certain percentage of duty demanded or penalty imposed which was mandatory to be deposited before filing the appeal - section 35F of Central Excise Act 1944 - HELD THAT - Perusal of section 35F of Central Excise Act 1944 makes it apparent and clear that the requirement of this section is mandatory requirement and the failure thereof results in rejection of appeal in limine . However keeping in view the acknowledgement of the appellant for pursuing this matter to be adjudicated on merits it is being reasonable in the interest of justice that the matter be remanded back to the Commissioner (Appeals) with the direction to the appellant to make good the absence of payment of amount of mandatory pre deposit prior for the appeal being heard by Commissioner (Appeals). In nutshell the appellant is allowed an opportunity to make the compliance of the section 35F of Central Excise Act. Appeal allowed by way of remand.

Summary

Issues:
Adjudication based on third-party information, non-payment of service tax, rejection of appeal for lack of pre-deposit, appeal before Tribunal.

Analysis:
The case involved an adjudication initiated against the appellant based on information from the Income Tax Department regarding the appellant's income from taxable services but non-payment of service tax. A Show Cause Notice was issued for recovery of the unpaid tax amount, which was confirmed in the Order in Original. The appellant's appeal before the Commissioner (Appeals) was rejected due to failure to deposit a mandatory percentage of the duty demanded or penalty imposed as required under section 35F of the Central Excise Act, 1944. The appellant, unaware of this requirement, sought adjudication on merits. The Tribunal considered the submissions of both parties and noted that the appeal was dismissed solely due to non-compliance with section 35F.

The Tribunal explained the mandatory nature of section 35F, which necessitates the deposit of a specified percentage of the duty demanded or penalty imposed before entertaining an appeal. Despite the appellant's request for adjudication on merits, the Tribunal emphasized the importance of complying with the statutory provision. Consequently, the Tribunal allowed the appeal by remanding the matter back to the Commissioner (Appeals) with a directive for the appellant to fulfill the pre-deposit requirement before the appeal could be heard on its merits. The Commissioner (Appeals) was instructed to proceed with adjudication once the appellant complied with the pre-deposit obligation, thereby granting an opportunity for the appellant to rectify the deficiency and have the appeal considered on its substantive merits.

In conclusion, the Tribunal's decision allowed the appeal by remanding the case for compliance with the pre-deposit requirement under section 35F of the Central Excise Act, enabling the Commissioner (Appeals) to adjudicate the matter on its substantive merits after the appellant fulfills the necessary deposit.