Pre-deposit dismissal cannot stand where liability evidence was unexamined; matter remanded for fresh adjudication on merits.

Non-compliance with pre-deposit under Section 35F did not justify sustaining dismissal where reconciliation material and a Chartered Accountant's certificate indicated that the tax liability had substantially been discharged and the merits had not been examined. Because the original and appellate authorities had not considered the substantive liability on the basis of the additional material, the dispute required de novo adjudication. The impugned orders were set aside and the matter was remanded to the original authority to reconsider the reconciliation statement and supporting certificate and to decide the controversy afresh after granting a reasonable opportunity of hearing.

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Issues: (i) Whether the dismissal of the assessee's appeal for non-compliance with the pre-deposit requirement could be sustained in the facts of the case; (ii) Whether the matter required remand for fresh adjudication after considering the reconciliation statement and Chartered Accountant's certificate.

Issue (i): Whether the dismissal of the assessee's appeal for non-compliance with the pre-deposit requirement could be sustained in the facts of the case.

Analysis: The appeal before the lower appellate authority had been rejected solely for non-deposit under Section 35F of the Central Excise Act. In the present proceeding, the assessee placed reliance on a reconciliation statement and a Chartered Accountant's certificate to show that the service tax liability had substantially been discharged and that only a small balance remained. Since this material had not been examined on merits by the lower authorities, the summary dismissal could not be allowed to stand in isolation from the dispute on liability.

Conclusion: The dismissal for non-compliance with pre-deposit was not allowed to stand.

Issue (ii): Whether the matter required remand for fresh adjudication after considering the reconciliation statement and Chartered Accountant's certificate.

Analysis: The assessee had not earlier built up the case on merits before the original authority, and the appellate authority had also not examined the substantive claim. As the reconciliation statement and supporting certificate were material to the dispute, fairness required that the original authority consider them and decide the controversy afresh after giving a reasonable opportunity of hearing.

Conclusion: The matter was remanded to the original authority for de novo adjudication after considering the additional material and affording a reasonable opportunity of hearing.

Final Conclusion: The impugned orders were set aside and the dispute was sent back for fresh decision on merits, leaving the substantive tax controversy to be adjudicated afresh.

Ratio Decidendi: Where material evidence bearing on tax liability has not been considered by the lower authorities, and the dispute has not been adjudicated on merits, the matter may be remanded for de novo determination after granting a fair opportunity of hearing.

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