2024 (10) TMI 148 - AT - Service Tax

Non-payment of service tax on consideration towards Sale of Service - making payment of amount of pre-deposit by way of DRC-03 challan - recovery with interest and penalty - HELD THAT - The Principal Bench of the Tribunal in TINNA RUBBER INFRASTRUCTURE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CGST, DELHI SOUTH 2024 (3) TMI 838 - CESTAT NEW DELHI had held that the payment made through DRC-03 is not permissible under Section 35F. The Tribunal in the case of M/S ARMY WELFARE HOUSING ORGANISATION VERSUS COMMISSIONER OF CENTRAL GOODS, SERVICE TAX, DELHI SOUTH 2024 (3) TMI 854 - CESTAT NEW DELHI has observed that there is no provision of using DRC-03 for the purpose of pre-deposit. Apparently and admittedly, DRC-03 is not the challan generated on CBIC GST/( ICE GATE), e-payment portal. Resultantly, it becomes clear that there was no payment of pre-deposit amount i.e. 7.5% of the amount equivalent to 7.5% of the demand confirmed vide the impugned OIO, at the time of filing the appeal before Commissioner (Appeals). Since it was statutory payment there was no mandate on Commissioner (Appeals) to specifically notify the non-payment of amount of pre-deposit prior rejecting the appeal on the said ground. Hence even if the letter dated 2.1.2023 was not received by the appellant. No benefits seems extendable in favour of the appellant. There are no infirmity in the order under challenge. Same is hereby upheld. The payment at the time of filing the appeal before this Tribunal of the amount equivalent to 10% of the demand confirmed by the impugned OIO (including the aforesaid 7.5 % thereof), it being the payment made after the order under challenge, it is insufficient to affect the legality and reasonably in the order under challenge - appeal dismissed.

Summary

Issues:
Non-payment of service tax, rejection of appeal by Commissioner (Appeals) due to payment method, legality of pre-deposit payment through DRC-03 form, applicability of CBIC instruction, relevance of circular on payment procedures, adequacy of payment made before Tribunal.

Analysis:
The case involves a dispute regarding non-payment of service tax by the appellant, leading to a Show Cause Notice for recovery. The appellant challenged the order of the original adjudicating authority, which was upheld by the Commissioner (Appeals), prompting the appeal before the Tribunal. The key contention was the rejection of the appeal by the Commissioner (Appeals) based on the method of pre-deposit payment made through DRC-03 form.

During the hearing, the appellant's counsels argued that the appellant had made the pre-deposit payment through DRC-03 form, which was not objected to by the Commissioner (Appeals) initially. They highlighted the non-receipt of a letter instructing to rectify the payment method and emphasized that the relevant instruction was not in existence when the appeal was filed. The appellant also cited a precedent to support their case.

In response, the Departmental Representative contended that the DRC-03 form was not an acceptable mode of pre-deposit payment as it is statutorily mandatory. The Department relied on specific decisions to support their argument against the validity of the DRC-03 form for pre-deposit payment.

The Tribunal, after considering the arguments, noted that the issue of using DRC-03 for pre-deposit payment had been settled in previous cases. The Tribunal referred to various decisions where it was held that DRC-03 was not permissible under Section 35F. Additionally, the Tribunal cited a specific case where the use of DRC-03 for pre-deposit was disallowed.

The Tribunal further discussed the applicability of CBIC instructions and circulars related to payment procedures, emphasizing the requirement to follow the prescribed methods for payment. It was highlighted that the DRC-03 form did not align with the specified e-payment portal, leading to the conclusion that the pre-deposit amount was not paid in accordance with statutory requirements.

Ultimately, the Tribunal upheld the order under challenge, stating that the payment made before the Tribunal was insufficient to rectify the initial non-compliance with pre-deposit requirements. The appeal was dismissed based on the findings and observations made during the proceedings.