M/s. Dani Aviation Services Pvt. Ltd. vs The Honourable Customs Excise and Service Tax Appellate Tribunal, South Zonal Bench, The Commissioner of Central Excise and The Commissioner of Service Tax-Chennai IV Division

T.S. Sivagnanam, J.—These Civil Miscellaneous Appeals are directed against the Miscellaneous order dated 05.08.2013 and final order dated 13.11.2013 dismissing the appeals on the ground that the assessee did not comply with the condition of pre-deposit as imposed in the order dated 05.08.2013. We have heard learned counsel appearing for the appellant and the learned Standing Counsel appearing for respondents 2 and 3.

The assessee is providing ground handling services to M/s. Sri Lankan Airlines Pvt. Ltd., and other non-scheduled airlines. A demand of tax of Rs. 1,06,60,210/- for the period October, 2007 and from July 2008 to September, 2010 along with interest and penalty was issued to the assessee. As against which, the assessee preferred appeal before the Tribunal and sought for waiver of pre-deposit of penalty and interest. The Tribunal noticed that the assessee had collected the entire service tax amount and retained the same with them. When the same was detected by the Department, the assessee paid a portion of service tax and subsequently, before the issuance of show cause notice the remaining amount has been paid. Taking into consideration that the entire amount of service tax has been paid, the assessee was directed to pre-deposit a sum of Rs. 25.00 lakhs towards penalty and the entire interest within a period of eight weeks and report compliance on 14.10.2013. Since the assessee did not comply with the order, the appeals itself stood dismissed.

Prima facie the conduct of the assessee appears to be not in accordance with law, since they are bound to remit the service tax collected from the customers within the time prescribed under the Finance Act. Having not done so, the Adjudicating Authority has levied interest and penalty. The levy of interest being automatic, the assessee cannot be granted any indulgence on the said aspect.

It is submitted by the learned counsel appearing for the assessee that in respect of show cause notice dated 26.7.2010 in Show Cause Notice No. 388 of 2010, the total amount of interest demanded is Rs. 12,99,083/- has been paid by the assessee in full and a copy of the payment challan has been filed in page 19 of the typed set of papers. In respect of show cause notice dated 06.04.2011 in Show Cause Notice No. 141 of 2011, a demand of interest is Rs. 14,97,379/-. Since interest being an automatic levy, the assessee is bound to pay the entire interest demanded. Therefore, to that extent, the order passed by the Tribunal is confirmed.

As regards the levy of penalty, it is seen that the assessee did not respond to the show cause notices and no reply has been filed. The original authority adjudicated the notice and issued the demand. The assessee has raised several issues before the Tribunal and considering the fact that the entire service tax has been paid and the entire interest in respect of one show cause notice has already been paid and in respect of the show cause notice dated 06.04.2011, the assessee is directed to pay the same by this order, we deem it appropriate to direct the assessee to pre-deposit the penalty of Rs. 10,00,000/- (Rupees ten lakhs only) instead of Rs. 25.00 lakhs as ordered by the Tribunal within a period of eight weeks from the date of receipt of a copy of the order. Except for this modification, the order of the Tribunal stands confirmed. Accordingly, the above Civil Miscellaneous Appeals are disposed of. No costs. Consequently, connected Miscellaneous petitions are closed.