2025 (4) TMI 961 - AT - Service Tax

Dismissal of appeal for non-compliance of the conditions in terms of Section 35F of the Central Excise Act 1944 - HELD THAT - Department is placing reliance in the case of Union of India Vs Aakar Advertising 2008 (4) TMI 50 - HIGH COURT RAJASTHAN in which Hon ble High Court of Rajasthan Jodhpur decided that Tribunal could not entertain appeal on merit when impugned order dismissing appeal for non-payment of predeposit not paid dismissal of appeal by Commissioner (Appeals) sustainable and Tribunal not empowered to entertain appeal on merit. Therefore no need to decide the appeal on merit since appellant failed to pre-deposit as directed by the Commissioner (Appeals) as required under Section 35F of the CEA 1944. Therefore appeal is not maintainable as per law and facts of the case and liable to be dismissed on this ground itself - Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the appellant was liable to pay service tax under the category of "Rent-a-Cab Service" for letting out buses to the Andhra Pradesh State Road Transport Corporation (APSRTC).

- Whether the appellant complied with the mandatory pre-deposit condition under Section 35F of the Central Excise Act, 1944, as a prerequisite for maintaining the appeal before the Commissioner (Appeals) and subsequently before the Tribunal.

- Whether the appeal filed by the appellant is maintainable in the absence of compliance with the pre-deposit condition.

- Whether the Tribunal has jurisdiction to entertain the appeal on merit despite non-compliance with the pre-deposit condition.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability to pay service tax under "Rent-a-Cab Service" for letting out buses to APSRTC

Relevant legal framework and precedents: The demand for service tax was made under the category of "Rent-a-Cab Service" as defined under the Finance Act, 1994. The proviso to Section 73(2) of the Finance Act, 1994, was relied upon to confirm the demand for service tax on the activity of letting out buses.

Court's interpretation and reasoning: Although the appellant had entered into an agreement with APSRTC for use of the buses to provide public transport services, the Adjudicating Authority held that the activity of letting out buses amounted to "Rent-a-Cab Service" and was therefore liable to service tax. The appellant's contention that the buses were used exclusively for public transport through APSRTC did not exempt the transaction from being taxable under the said category.

Key evidence and findings: The agreement between the appellant and APSRTC, the issuance of Show Cause Notice, and the confirmation of demand by the Adjudicating Authority formed the basis for the liability.

Application of law to facts: The letting out of buses to APSRTC was held to be a taxable service under "Rent-a-Cab Service" as per the Finance Act, 1994.

Treatment of competing arguments: The appellant's rebuttal was considered but ultimately rejected by the Adjudicating Authority and Commissioner (Appeals).

Conclusions: The appellant was liable to pay service tax on the activity of letting out buses to APSRTC under the "Rent-a-Cab Service" category.

Issue 2: Compliance with pre-deposit condition under Section 35F of the Central Excise Act, 1944

Relevant legal framework and precedents: Section 35F of the Central Excise Act, 1944, mandates that where an appeal relates to duty demanded on goods not under the control of central excise authorities, the appellant must deposit the duty demanded or penalty levied pending appeal. The provisos allow the Commissioner (Appeals) or Tribunal to dispense with such deposit if undue hardship is caused, subject to safeguarding revenue interests. The case of Union of India Vs Aakar Advertising [2008 (11) STR 5 (Raj)] was cited, wherein the High Court held that the Tribunal cannot entertain an appeal on merit if the pre-deposit condition is not complied with.

Court's interpretation and reasoning: The Commissioner (Appeals) directed the appellant to deposit 10% of the total service tax liability as a condition for stay of demand. The appellant failed to comply despite sufficient time being granted. The Commissioner (Appeals) dismissed the appeal for non-compliance. The Tribunal held that since the pre-deposit was mandatory and not complied with, it could not entertain the appeal on merit.

Key evidence and findings: The order of the Commissioner (Appeals) dated 13.08.2012 directing pre-deposit, the appellant's failure to deposit the amount, and the subsequent dismissal of appeal for non-compliance.

Application of law to facts: The mandatory nature of Section 35F was applied strictly. The appellant's failure to deposit 10% of the demanded service tax rendered the appeal non-maintainable.

Treatment of competing arguments: The appellant did not appear or respond despite notices. The Tribunal relied on the Department's submissions and legal provisions to dismiss the appeal without deciding on merit.

Conclusions: Non-compliance with pre-deposit condition under Section 35F led to dismissal of appeal; the Tribunal cannot entertain appeal on merit without such compliance.

Issue 3: Maintainability of the appeal before the Tribunal in absence of pre-deposit

Relevant legal framework and precedents: Section 35F of the Central Excise Act, 1944, and judicial precedents including Union of India Vs Aakar Advertising establish that appeals are not maintainable without compliance with the pre-deposit condition unless dispensed with by the competent authority.

Court's interpretation and reasoning: The Tribunal emphasized that the appeal was dismissed by the Commissioner (Appeals) for non-compliance with pre-deposit, a mandatory condition. The Tribunal held that it lacked jurisdiction to entertain the appeal on merit in such circumstances.

Key evidence and findings: The dismissal order by Commissioner (Appeals) and the appellant's failure to deposit the pre-deposit amount.

Application of law to facts: The Tribunal applied the statutory mandate strictly and declined to examine the substantive merits of the case.

Treatment of competing arguments: The absence of any representation or response from the appellant was noted, and the Tribunal relied solely on the Department's submissions and the record.

Conclusions: The appeal was not maintainable before the Tribunal due to non-compliance with mandatory pre-deposit condition.

3. SIGNIFICANT HOLDINGS

"Where the appellant fails to comply with the mandatory pre-deposit condition under Section 35F of the Central Excise Act, 1944, the appeal is not maintainable and the Tribunal cannot entertain the appeal on merit."

"The letting out of buses to a government-owned transport corporation for public service does not exempt the transaction from being taxable under the category of 'Rent-a-Cab Service' under the Finance Act, 1994."

"The Commissioner (Appeals) has the authority to impose conditions such as pre-deposit for granting stay of demand, and non-compliance with such conditions justifies dismissal of appeal."

Final determinations:

- The appellant was liable to pay service tax on the activity of letting out buses under the "Rent-a-Cab Service" category.

- The appellant failed to comply with the mandatory pre-deposit condition under Section 35F of the Central Excise Act, 1944.

- The appeal was rightly dismissed by the Commissioner (Appeals) for non-compliance with pre-deposit condition.

- The Tribunal lacked jurisdiction to entertain the appeal on merit due to non-compliance with the pre-deposit condition and accordingly dismissed the appeal.