Ramendra Sing Bais vs CESTAT

V.A. Naik, J.

Heard. By this appeal, the appellant challenges the order of the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai, dated 30-9-2013, dismissing the application filed by the appellant for waiver of dues for want of prosecution and directing the appellant to deposit the amount of interest and penalty within a period of four weeks and report compliance to the Tribunal on 11-11-2013.

The appellant is a proprietary firm engaged in the business of providing Manpower Recruitment Service to the Ballarpur unit. According to the appellant, the appellant was under bona fide impression that no Service Tax was payable on the services provided by it. The appellant, however, applied for Service Tax registration in March, 2007 and paid the Service Tax for the period between 2005 to 2007 on 29-10-2008. The appellant was served with the notice by the respondent on 30-6-2010 asking the appellant to pay the Service Tax penalty and interest for the period from 2005 to 2007 as the appellant had evaded the payment of Service Tax during the said period. The appellant filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal along with an application for waiver of pre-deposit.

Since the appellant was not present before the Tribunal, the application for waiver of deposit was dismissed for want of prosecution and the appellant was directed to deposit the amount, interest and penalty within a period of four weeks and report compliance on 11-11-1993. Since the appellant did not comply with the direction of the Tribunal to deposit the interest and penalty within a period of four weeks and also did not report compliance on 11-11-2013, the appeal filed by the appellant was dismissed by the order dated 11-11-2013. The orders dated 30-9-2013 and 11-11-2013 are challenged in this appeal.

Mr. Chawhan, the learned counsel for the appellant, submitted that the Tribunal could not have dismissed the appeal and the application for waiver of deposit only because the appellant failed to remain present before the Tribunal on 30-9-2013. The learned counsel relied on a decision of the Gujrat High Court in the case of Bakul Chemicals v. Union of India through Joint Secretary, dated 24-4-2013 to substantiate his submission. It is submitted that this Court may impose some costs on the appellant and set aside the impugned orders. It is submitted that the appellant was not liable to pay the penalty as there was no intention on the part of the appellant to evade the payment of the Service Tax. It is submitted that the appellant was under the bona fide impression that the Service Tax was not payable by the appellant.

Mr. Deshpande, the learned counsel for the respondent Nos. 1 to 3, supported the order of the Tribunal and submitted that the Tribunal was justified in dismissing the application as the appellant failed to remain present before the Tribunal on as many as five dates of hearing. It is submitted that after the appellant filed the application for waiver of deposit, the appellant did not turn up before the Tribunal when the application was listed for hearing on five occasions. It is submitted that the appellant is liable to pay the penalty as the appellant had voluntarily applied for Service Tax registration in March, 2001 and there is no reason to believe that the appellant was not aware that the appellant was liable to pay the Service Tax on the services provided by him. It is submitted that it was found by the respondents that there was evasion of Service Tax and notice was issued in the year 2010 asking the appellant to pay the Service Tax, interest and the penalty. It is submitted that this Court may direct the appellant to deposit at least 50% of the amount due and payable by the appellant towards penalty if this Court is inclined to set aside the order and grant an opportunity to the appellant.

On hearing the learned counsel for the parties, it appears that substantial question of law arises for determination in this appeal:

"Whether, in the facts of the case and in the interest of justice, the appellant is entitled to an opportunity to prosecute the application for waiver of deposit and also the appeal filed before the Tribunal?"

The appellant had filed the appeal and also an application for waiver of pre-deposit before the Customs, Excise and Service Tax Appellate Tribunal. It is recorded by the Tribunal in the impugned order dated 30-9-2013 that the application for waiver of pre-deposit was adjourned on four occasions by the Tribunal before 30-9-2013 only because appellant had failed to remain present before the Tribunal despite the service of notice on the appellant. On 30-9-2013, there was no other alternative for the Tribunal but to dismiss the application filed by the appellant for waiver of pre-deposit. If a party remains absent before a Tribunal or a Court of Law, the Court cannot be found at fault in dismissing the proceedings filed by the party in the absence of prosecution. The Tribunal waited for the appellant on five dates, of hearing, but the appellant failed to remain present. We, therefore, do not find any fault in the order of the Tribunal rejecting the application filed by the appellant in default.

We, however, find on hearing the learned counsel for the perusal of the appellant and on the perusal of the record, that an opportunity needs to be granted to the appellant to prosecute the matter filed by the appellant before the Tribunal on certain conditions. In the instant case, the penalty is to the extent of Rs. 8,75,000/-. Merely because it is claimed by the appellant that the appellant had not intentionally evaded the payment of Service Tax, we would not be in a position to remand the matter to the Tribunal by setting aside the impugned orders without imposing any conditions on the appellant. We have noted that the appellant had voluntarily applied for Service Tax in March, 2007 and paid the Service Tax for the first time on 29-10-2008. The appellant was totally negligent in prosecuting the matter before the Tribunal. The Tribunal was required to issue notice to the appellant on each date of hearing on nearly four or five occasions. Though the impugned orders are passed on 30-9-2013 and 11-11-2013 the appellant has belatedly filed the instant appeal on 8-5-2014. This shows further negligence on the part of the appellant. The judgment of the Gujrat High Court in the case of Bakul chemicals cannot be made strictly applicable to the facts of this case.

In the facts and circumstances of the case and in the interest of justice, we are inclined to set aside the orders of the Tribunal on the condition that the appellant deposits 25% of the amount payable by the appellant before the Tribunal within a period of four weeks. Hence, we answer the substantial question of law partly in favour of the appellant on the condition that the appellant deposits 25% of the penalty before the Tribunal within a period of four weeks.

Hence, for the reasons aforesaid, the appeal is partly allowed. The impugned orders are hereby set aside on the condition that the appellant deposits 25% of the penalty before the Tribunal within a period of four weeks. Order accordingly. No costs.