2016 (1) TMI 627 - AT - Service Tax

Tribunal Upholds Pre-Deposit Rule: Appellant Must Pay 7.5% to Challenge Service Tax Demand

The Tribunal rejected the appellant's plea to appropriate a remitted amount for a different service category against a confirmed Service Tax demand. ... Mandatory pre-deposit (under Section 35F of the Central Excise Act, 1944, as amended with effect from 6-8-2014) - appellant had already remitted about 73% of the assessed demand as against the requirement of 7.5% - supply of tangible goods for use service - Held that:- The deposit by the assessee is however admittedly not for rendition of supply of tangible goods for use service but for Transportation of Passengers by Air Service. Compulsory pre-deposit under Section 35F imposed with effect from 6-8-2014 invites a mere administrative process, of ascertaining whether pre-deposit as stipulated was made at the time of filing the appeal or whether remittance of any Service Tax/penalty even prior to the institution of the appeal is for the same service category as is assessed and therefore counts towards compliance with the clear mandate of the amended Section 35F. On the aforesaid analysis, the plea in the present application is mis-conceived as is the application. Misc. Application is rejected. The appellant shall deposit 7.5% of the assessed demand within two weeks from today, in default, the appeal shall stand rejected for failure of the mandatory pre-deposit. Issues:Appeal against adjudication order dated 31-1-2015 confirming Service Tax demand, Appropriation of remitted amount under different service category, Compliance with mandatory pre-deposit under Section 35F of the Central Excise Act, 1944.Analysis:1. The appellant filed an application seeking a determination that no further pre-deposit is required as they had already remitted 73% of the assessed demand, exceeding the mandatory 7.5% pre-deposit requirement under Section 35F of the Central Excise Act, 1944. The appellant challenged the adjudication order dated 31-1-2015, which confirmed a Service Tax demand of Rs. 1,45,27,904/- for providing 'supply of tangible goods for use' service during the relevant period.2. The appellant claimed to have remitted Rs. 1,04,96,924/- as Service Tax under 'Transportation of Passengers by Air Service' from July 2010 to March 2012. They argued that this amount should have been appropriated against the confirmed demand of Service Tax for the supply of tangible goods for use service. However, the Tribunal noted that the remittance was for a different service category and could not be considered as a deposit for the purpose of the mandatory pre-deposit under Section 35F.3. The Tribunal clarified that it is not within its purview to assess the correctness of the service classification in the impugned order or to delve into the merits of the appeal at the stage of compliance with the mandatory deposit under Section 35F. The Tribunal highlighted that the amended Section 35F, effective from 6-8-2014, streamlined the pre-deposit process to focus on administrative compliance rather than adjudicatory procedures.4. Based on the analysis, the Tribunal deemed the appellant's plea and application as misconceived. The miscellaneous application was rejected, and the appellant was directed to deposit 7.5% of the assessed demand within two weeks to avoid rejection of the appeal for non-compliance with the mandatory pre-deposit requirement. The case was listed for compliance reporting on a specified date.This detailed analysis of the judgment highlights the issues raised by the appellant, the Tribunal's interpretation of the legal provisions, and the ultimate decision regarding compliance with the mandatory pre-deposit under the Central Excise Act, 1944.