2023 (2) TMI 140 - HC - Service Tax

Maintainability of appeal - appeal dismissed on the ground of non-deposit of mandatory pre-deposit, after having heard the Appeal on merits - petitioner is a non-registered dealer under the Service Tax Act - HELD THAT - Admittedly, petitioner is an unregistered dealer. His appeal has been dismissed on the ground of non-payment of mandatory pre-deposit. It does not appear that there was intent on the part of the petitioner to avoid payment of pre-deposit @7.5% as provided under the amended section 35F of Central Excise Act, 1944. Respondents have also adverted to the facility provided under the RBI Instruction for making such pre-deposit by unregistered dealer / registered non-assessees. In those circumstances, interest of justice would be met if the matter is remanded to the Appellate Authority. Petitioner is required to make pre-deposit within a period of four weeks from today. The impugned order is set aside - petition allowed.

Issues involved:
1. Dismissal of appeal on the ground of non-payment of mandatory pre-deposit.
2. Petitioner's plea regarding unawareness of online payment facility.
3. Respondents' objection to non-payment of pre-deposit under section 35F of Central Excise Act, 1944.
4. Consideration of relevant material facts and plea for remand to the Appellate Authority.

Issue 1: Dismissal of appeal on the ground of non-payment of mandatory pre-deposit:
The petitioner, a non-registered dealer, engaged in providing construction services to the State Government, faced a proceeding under a show-cause notice for non-payment of service tax liability. The appeal was dismissed solely due to non-payment of mandatory pre-deposit of 7.5% of the tax liability. The petitioner contended that being unaware of the online payment facility through the RBI Portal, he was unable to make the pre-deposit, and therefore, filed a writ petition seeking appropriate directions for the revival of the appeal and a decision on merits after providing necessary instructions for the pre-deposit.

Issue 2: Petitioner's plea regarding unawareness of online payment facility:
The petitioner, through his counsel, expressed unawareness of the RBI Portal's online payment facility, which resulted in the failure to make the mandatory pre-deposit. The petitioner clarified that there was no intention to avoid the pre-deposit and requested the opportunity to make the payment to proceed with the appeal on its merits. The petitioner highlighted the lack of knowledge about the RBI Instruction dated 05.09.2008, emphasizing the need for assistance in making the pre-deposit.

Issue 3: Respondents' objection to non-payment of pre-deposit under section 35F of Central Excise Act, 1944:
The Respondents objected to the petitioner's plea regarding non-payment of the mandatory pre-deposit, citing provisions under section 35F of the Central Excise Act, 1944. The Respondents argued that the dismissal of the appeal based on non-payment of the pre-deposit was lawful and not arbitrary. They referred to a FAQ issued by the CBIC, providing guidance on making payments for non-assessees through registration on the ACES portal and the RBI Instruction for accepting payments from registered non-assessees.

Issue 4: Consideration of relevant material facts and plea for remand to the Appellate Authority:
After considering the submissions from both parties and the relevant material facts, the Court acknowledged the petitioner's status as an unregistered dealer and the lack of intent to evade the pre-deposit requirement. The Court noted the facility for making pre-deposits by unregistered dealers as per the RBI Instruction. In the interest of justice, the Court decided to remand the matter to the Appellate Authority, directing the petitioner to make the pre-deposit within four weeks for the appeal to be heard on its merits. The impugned order dismissing the appeal was set aside pending the petitioner's compliance with the pre-deposit requirement.

In conclusion, the High Court of Jharkhand allowed the writ petition in part, setting aside the order dismissing the appeal and remanding the matter for further proceedings contingent upon the petitioner making the mandatory pre-deposit within the specified timeline. The Court clarified that it did not delve into the merits of the case but focused on the procedural aspect of the pre-deposit issue.

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