Whether non-appearance in hearing can lead to ex-parte stay order?

PJ/Case Law /2016-17/3283

Case:- SHRI KRISHNA BUILDERS & PROPERTY DEV. (P) LTD. VERSUS C.S.T., CHENNAI

Citation:- 2016 (41) S.T.R. 814 (Mad.)

Brief Facts:-The assessee filed an appeal before the Tribunal against the order passed by the Commissioner of Service Tax dated 31-1-2012 by which, the Commissioner demanded service tax of Rs. 78,03,160/- for the period from June, 2007 to November, 2009 under proviso to Section 73(1) of the Finance Act r/w Section 73(2) of the Act. Further the assessee was directed to pay interest for non-payment of service tax in terms of Section 75 of the Act and though penalty equivalent to the amount of the Service Tax was demanded under Section 7B of the Finance Act, 1994 (The Act), however taking note of the contentions raised by the assesses, the penalty was reduced to 25% of the service tax demanded. Further no penalty was imposed under Section 76 of the Act. Along with the appeal, the assessee filed an application for stay of the Order-in-Original dated 31-1-2012, for waiver of pre-deposit and interest. When the application for waiver of pre-deposit and stay came up for hearing before the Tribunal on 31-12-2013, none appeared for the assessee and in the absence of any application for adjournment, the Tribunal proceeded to hear the Authorised Representative of the Department and having noted that the case was adjourned earlier on several occasions, directed the appellant to pre-deposit a sum of Rs. 78,03,160/- being the entire amount of service tax demanded.
Challenging the said order, the assessee is before this Court and seeks admission of the civil miscellaneous appeal raising the following substantial questions of law :
1.         Has not the CESTAT erred in concluding that the appellant is not interested in conducting the stay petition when the appellant had appeared on 24-9-2013 and conducted the case and the case was adjourned when further details were sought for?
2.         Whether in the facts and circumstances of the case, the CESTAT is right in not considering the preliminary question of limitation before directing the appellant to pre-deposit the entire amount of service tax?
3.         Whether in the facts and circumstances of the case, the CESTAT is right in not considering the fact that the main contractor has paid service tax on the flats sold to third parties?
4.         Whether in the facts and circumstances of the case the CESTAT is right in not considering the fact that the demand cannot be sustained on the principle of revenue neutrality and when there is no loss to the Government?

Appellant’s Contentions:-In the memorandum of appeal, the assessee has stated that when the case came up before the Tribunal for hearing on 24-9-2013 certain details were sought for by the Tribunal and the assessee sought further time. Thereafter the matter was adjourned to 31-12-2013 and in the meanwhile, the father of the counsel for the appellant expired and the counsel was away from the station owing to certain religious formalities and returned only during the last week of December. Further it is stated that the counsel for the assessee checked the website of CESTAT to see whether the case was listed and due to oversight the counsel was under the impression that there was no sitting of the Tribunal and the assessee case has not been posted for hearing. It is the further contention of the learned counsel for the assessee that the valid defence raised in the appeal was not considered by the Tribunal and therefore, pleads that the assessee might be given an opportunity to place all the materials and contention before the Tribunal. It is contended that the appellant was diligent in prosecuting the appeal and would be able to establish a prima facie case on limitation apart from the fact that the main contractor has paid service tax on the flats sold to third parties and the plea of revenue neutrality.

Reasoning Of Judgement-We have heard Mr. Murali Krishna learned counsel appearing for the assessee and Mr. V. Sundareswaran, learned Standing Counsel appearing for the Revenue.
It appears that as on the date when the application was disposed of on 31-12-2013, it was not the first hearing and the case was heard earlier. According to the assessee, the case was adjourned for the purpose of furnishing certain materials. However, the nature of such materials is not placed before this Court. Be that as it may, the reason assigned for non-appearance on 31-12-2013, prima facie appears to be genuine in the absence of any rebuttal for the same. Therefore, in order to given an opportunity to the assessee and in the interest of justice, we deem it appropriate that the Tribunal should hear the assessee on merits on the miscellaneous application.

Accordingly, this civil miscellaneous appeal is allowed and the impugned order is set aside. The matter is remitted back to the Tribunal for considering of the miscellaneous application afresh on merits. No costs. Consequently, the connected miscellaneous petition is closed.
Decision:-Appeal allowed.

Comment:- The crux of the case is that ex-parte decision even on stay application is not tenable if there was genuine reason for non-appearance like death of father of the counsel for the appellant.

Prepared By- Tushar Gupta

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PJ/Case Law /2016-17/3283

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