By TIOL News Service

MUMBAI, AUG 19, 2016: THE appellant was issued a SCN demanding service tax of Rs.37,18,157/- on the ground that they were providing rent-a-cab service and had collected service tax from their customers but did not deposit the same with the Government.

The Additional Commissioner passed an order on 29.10.2013 confirming the demand with interest and penalties and, therefore, they filed an appeal before the Commissioner (Appeals).

The Commissioner (Appeals) dismissed the appeal on 10.12.2015 for non-compliance of Section 35F of the CEA, 1944on the ground that the appellant, in the absence of any stay application, had not deposited the entire amount of tax plus interest and penalties.

Before the CESTAT, the appellant submitted that a stay application was filed by way of a letter dated 12.5.2015 to the Commissioner (Appeals) [received in the office on 13.5.2015] in which they requested for waiver of service tax demand and penalties. They also submitted that they had been making periodic payments, which is more than 10% of the total amount; they had also requested for release of the bank account attached by the department; therefore, on this basis their appeal should have been entertained.

The AR submitted that this 'letter' had been filed after the statutory period of three months. In fact, it had been filed after one year and four months of filing of the appeal on 23.1.2014. The Commissioner (Appeals) had, therefore, rightly dismissed the appeal for non-compliance, asserted the AR.

The Bench observed -

"6. On consideration of the submissions made by the parties and perusal of the records, it is seen that the appellant did not file any stay application along with their appeal within the statutory period under Section 35F of the Central Excise Act, 1944. The Commissioner (Appeals) was correct in rejecting the letter-cum-stay application, which was submitted after one year and four months of the filing of the appeal and much beyond the statutory period laid down in the Central Excise Act. The only option left for the appellant in such a situation was to deposit the entire amount of tax with interest and penalties before filing of the appeal, as the appellant had not sought waiver of pre-deposit. The Commissioner (Appeals) has therefore rightly rejected the appeal for non-compliance of Section 35F ibid relying on the case law of Navin Chandra Chhotelal vs. Central Board of Excise & Customs as reported in 1981 (8) ELT 679 (SC) = 2002-TIOL-323-SC-CUS, in which the Hon'ble Supreme Court has held as under:-

x x x

7. The appellant's plea that they have paid more than 10% of the disputed tax amount does not come to their rescue because the appeal in the instant case was filed before 6.8.2014 when the statutory provisions under Section 35F ibid for pre-deposit of 7.5% and 10% were introduced. Clearly, these provisions do not apply in the instant case as the appeal before Commissioner (Appeals) was filed on 23.1.2014 ."

The appeal was dismissed.

(See 2016-TIOL-2120-CESTAT-MUM )