No pre deposit should be insisted when the situation is revenue neutral.

PJ/Case Laws/2012-13/1501

Case:- VIDARBHA IRON & STEEL CO. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Citation:-2013 (288) E.L.T. 352 (Bom.)

Brief Facts:- Whether the CESTAT was justified in directing the appellants to make pre-deposit of Rs. 50 lakhs for entertaining the appeal against the order-in-original dated 14th July, 2010 is the question raised in this appeal. By order-in-original dated 14th July 2010, the adjudicating authority has confirmed service tax demand of Rs. 3.86 crores with interest and penalty. It is the case of the appellants that they are not liable to pay Service Tax.

Appellant’s Contention:- The Appellant contended that even assuming for the sake of arguments it is held that the appellants are liable to pay Service Tax under the aforesaid category, in the facts of the present case, it would be a case of revenue neutral because the customer to whom the appellants have rendered the services would be entitled to take credit of the Service Tax and in fact the customer has paid approximately Rs. 16.5 crores as excise duty in cash on the final products during the aforesaid period. The submission of the appellants is that assuming that the appellants are held liable to pay Service Tax, in view of the fact that the customer who is entitled to take credit of Service Tax would be entitled to refund as excise duty has been paid on the final products in cash without availing the credit and therefore the demand is in fact revenue neutral.

Respondent’s Contention:-The adjudicating authority has confirmed service tax demand of Rs. 3.86 crores with interest and penalty on the ground that during the period from 16th June, 2005 to 31st May, 2009, the appellants had rendered services under the category of man power recruitment and supply agency services. It is, however, contended on behalf of the revenue that it is not a fit case for 100% waiver of the pre- deposit.

Reasoning of Judgment:-We have considered the both sided parties. The duty demand be a case of revenue neutral, it would be just and proper to hear the appeal on merits without insisting pre-deposit. Accordingly, the order of the Tribunal directing pre-deposit of Rs. 50 lakhs is quashed and set aside and the tribunal is directed to hear the appeal on merits without insisting on pre-deposit. Appeal is disposed of in the above terms with no order as to costs.

Decision:-Appeal Allowed.

Comment:-The essence of this case is that when the demand raised and paid in cash is admissible as credit, the situation turns out to be revenue neutral and so the appellate authorities should hear case on merits rather than insisting for pre-deposit.

Comments

PJ/Case Laws/2012-13/1501

Post a Comment

Query