Substantial pre-deposit cannot justify further onerous deposit demand; appeal should be decided on merits.

Where a substantial pre-deposit of service tax and interest had already been made, insisting on a further large deposit as a condition for hearing the appeal was held to be unfair and unjust. The appellate authority was expected to treat the amount already deposited as sufficient and decide the appeal on merits rather than dismiss it for non-compliance. The dismissal for failure to comply with the pre-deposit direction was therefore set aside, and the matter was remanded to the Commissioner (Appeals) for decision on merits without any further pre-deposit condition.

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Issues: Whether the Commissioner (Appeals) was justified in dismissing the appeal for non-compliance with the pre-deposit direction and in insisting upon further deposit despite substantial deposit already made.

Analysis: The appellants had already deposited a substantial part of the service tax demand and interest. In that situation, the further direction to deposit a large additional sum as a condition for hearing the appeal was considered not fair and just. The appellate authority ought to have treated the amount already deposited as sufficient and proceeded to decide the appeal on merits instead of dismissing it for non-compliance.

Conclusion: The dismissal for non-compliance was set aside and the matter was remanded to the Commissioner (Appeals) for decision on merits without insisting on any further pre-deposit.

Final Conclusion: The appeal succeeded to the extent of securing a remand, and the assessee was relieved from the further pre-deposit condition.

Ratio Decidendi: Where substantial pre-deposit has already been made, the appellate authority should not insist on an unreasonable additional deposit and should decide the appeal on merits.

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