pre-deposit of tax before CESTAT

[govindaraju velugula]

We are going to appeal before CESTAT against the Order of the Commissioner (Appeals).  we want to pre-deposit the Servce Tax Liability before appealing and the same has been attached to appeal papers.  On whose name we have to pay and the payment through cheque/DD/GAR-7/ Challan.  Kindly clarify the same. 

[CASeetharaman KC]

Before you consider for pre deposit of service tax please do consider the possibility of filing an Appeal for waiver of pre deposit. Section 35F of the Central Excise Act deals with this issue and provides that the person desirous of appealing against the decision or order shall, pending the appeal, deposit with the adjudicating authority the tax demanded or the penalty levied. Wherein any particular case, the tribunal is of the opinion that the deposit of service tax demanded or penalty levied would cause undue hardship to such person the tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the interest of revenue. Such application shall be disposed within thirty days from the date of filing. 

        The dispensation of depositing of service tax or penalty is at the discretion of the tribunal.  It shall satisfy itself for passing such order. Therefore no yardstick can be fixed for exercising such powers by the tribunal. This may be depending upon the facts and circumstances of the cases.  The tribunal may dispense with the payment of tax or penalty in full or in part or may refuse the prayer of the appellant. In this article nearly fifteen case laws are discussed in which the tribunals ordered to dispense with the pre deposit of service tax or penalty in full since they found that prima facie the cases are in favor of the assessees.

Please explore this possibility before thinking of pre deposit

AI Summary

Pre-deposit requirement under Section 35F may be waived by tribunal; seek waiver before formally depositing. Pre-deposit of disputed service tax is required under Section 35F pending an appeal, but the tribunal may, in its discretion, dispense with the deposit-fully or partly-if deposit would cause undue hardship, subject to conditions to safeguard revenue; such waiver applications should be disposed within thirty days. Appellants should explore seeking waiver before making any pre-deposit, as tribunals have in multiple instances granted full dispensation where prima facie case favored the assessee.