2014 (12) TMI 1098 - HC - Service Tax

Tribunal's Order Requiring Pre-Deposit Set Aside, Appeals Remitted for Fresh Consideration

M/s. Shukla & Brothers Versus Customs, Excise & Service Tax Appellate Tribunal & Others

The court set aside the Tribunal's orders directing a 40% pre-deposit under Section 35F of the Central Excise Act, 1944, and the subsequent dismissal of ... Waiver of pre deposit - Repair and maintenance service - Construction service - Held that:- The impugned order directing the appellant to deposit 40% of the demand is sans any reason. The order is cryptic running into six lines recording that such cases of maintenance, repair and cleaning service have been heard earlier also and the appellant was directed to deposit 40% of the service tax demanded and report compliance by 11.04.2013. There is no other reason recorded in the order. Neither there is consideration, even worth the namesake of any prima facie case of the appellant nor there is any reason, much less finding with respect to the undue hardship. it was incumbent upon the Tribunal to have addressed the issue of prima facie case of the appellant and also that of undue hardship. impugned orders passed by the Tribunal on the waiver application, are not liable to be sustained and are set aside. As a consequence, the impugned orders passed by the Tribunal dismissing the appeals for non-compliance of the condition of pre-deposit also stands set aside. - Matter remanded back - Following decision of Mehsana Dist. Co-OP. Milk P.U. Ltd. Vs. Union of India [2003 (3) TMI 113 - SUPREME COURT OF INDIA] - Decided in favour of assesse. Issues Involved:1. Waiver of pre-deposit under Section 35F of the Central Excise Act, 1944.2. Dismissal of appeals for non-compliance with pre-deposit orders.3. Consideration of prima facie case and undue hardship by the Tribunal.Detailed Analysis:Waiver of Pre-deposit under Section 35F of the Central Excise Act, 1944:The appeals challenge the Tribunal's orders directing a 40% pre-deposit of the outstanding tax and penalty under Section 35F of the Central Excise Act, 1944. Section 35F mandates a pre-deposit for maintaining an appeal but allows for waiver if undue hardship is demonstrated. The Tribunal is required to consider both the prima facie merits of the case and the undue hardship caused by the deposit.Dismissal of Appeals for Non-compliance with Pre-deposit Orders:The Tribunal dismissed the appeals for non-compliance with the pre-deposit orders. The appellant argued that the Tribunal's order was cryptic and lacked reasons for requiring the 40% deposit, failing to consider the prima facie case and undue hardship.Consideration of Prima Facie Case and Undue Hardship by the Tribunal:The Tribunal's order was found to be lacking in reasoning and did not address the appellant's prima facie case or the issue of undue hardship. The court emphasized that the Tribunal must consider whether the appellant has a strong prima facie case and whether the pre-deposit would cause undue hardship. The Tribunal's discretion should be exercised to dispense with the pre-deposit if these conditions are met.Judgment Analysis:The court referred to several precedents to underline the importance of considering prima facie merits and undue hardship:- Sri Krishna Vs. Union of India: The Tribunal must consider undue hardship and the prima facie merits of the case.- I.T.C. Ltd. Vs. Commissioner (Appeals), Customs & Central Excise: A strong prima facie case should lead to waiver of pre-deposit to avoid undue hardship.- Indue Nissan Oxo Chemicals Industries Limited Vs. Union of India: Interim orders should not require full or substantial payment if the demand appears baseless.- Bhavya Apparels Pvt. Ltd. Vs. Union of India: The Tribunal must consider the custody of goods and undue hardship while deciding on pre-deposit.The court found that the Tribunal's order was cryptic and lacked consideration of the prima facie case and undue hardship, rendering it patently illegal. The Tribunal failed to record any reasons for the 40% deposit requirement.Conclusion:The court set aside the Tribunal's orders directing the 40% pre-deposit and the subsequent dismissal of appeals for non-compliance. The matter was remitted back to the Tribunal for a fresh determination of the waiver application and the appeals, considering the prima facie case and undue hardship as required by law.