By TIOL News Service

CHANDIGARH, MAY, 2014: A SCN was issued to the assessee for recovery of Service Tax of Rs.36.94 lakhs. The adjudicating authority confirmed a demand of Rs.35,14,534/- and also imposed penalty and interest.

The Commissioner (A) dismissed their appeal. The CESTAT ordered the assessee to pay the entire demand of Rs.35,14,534/- by 15.11.2013 for obtaining stay.

This order was challenged and the High Court directed the Tribunal to decide the stay application on merits and the parties were directed to appear before the Tribunal on 24.1.2014. In pursuance thereof, the Tribunal while disposing of the application stayed the entire demand of service tax and directed the assessee to pay interest component on the service tax assessed upto date within four weeks failing which it was informed that the appeal shall stand rejected.

So, the assessee is again before the High Court by filing an appeal u/s 35G of the CEA, 1944 and seeks modification of the Stay order passed by the CESTAT.

It is submitted that once the pre-deposit of the principal liability was waived, the interest being consequential was also required to be waived off by the Tribunal.

The High Court observed –

"…Once the realization of the principal liability was stayed and condition of pre-deposit was waived off, it would not be proper to direct that the entire interest component on the service tax assessed be deposited as a condition precedent for hearing of the appeal."

In fine, the appeal was allowed and the Tribunal was requested to decide the appeal expeditiously.

(See 2014-TIOL-859-HC-P&H-ST)