By TIOL News Service

MUMBAI, APR 04, 2013: WE recently reported the case 2013-TIOL-463-CESTAT-MUM wherein the CESTAT had observed thus –

"…In these circumstances, I find that the Commissioner has no knowledge how to deal with the appeals filed before him. In fact, the first duty of the Commissioner (Appeals) is to dispose of the stay application and if he is not satisfied with the arguments advanced for waiver of pre-deposit, he may ask for pre-deposit but while considering the stay application along with appeal together, he has no power to dismiss the appeal for non-compliance of Section 35F of the Central Excise Act."

The Commissioner(A) in the firing line was the CCE(Appeals), Aurangabad.

The CCE(A), Pune-I finds himself in a similar situation in the present case.

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The appellant undertook laying of cables, installation of electrical equipments, installation of street lights and transformers etc. The department was of the view that the activity undertaken by the appellant falls under the category of "Erection, Commissioning and Installation Services".

A SCN came to be issued for recovery of Service Tax of Rs.45,86,154/- for the period 11.07.2005 to 30.03.2007 and the same was confirmed along with penalty and interest by the adjudicating authority.

The appeal preferred before the lower appellate authority was dismissed for non-compliance of the provisions of Section 35F of the CEA, 1944. Inasmuch as during personal hearing, the Commissioner (Appeals) had directed the appellant to make a pre-deposit of Rs.20 lakhs and report compliance within a specified period and inasmuch as the same was not complied with, the appeal was dismissed.

So, the appellant is before the CESTAT.

The appellant submitted that majority of the activity undertaken by them relates to laying of cables on the roadside as per the works awarded by M/s MIDC and the said activity is not taxable as per Circular No. 123/05/2010-TRU dated 24.05.2010. However, it is also fairly conceded that the appellant might be liable to pay Service Tax on installation services but they were under bona fide belief that they are not liable to pay Service Tax on these activities.

The Revenue representative submitted that the activity undertaken by the appellant is not merely laying of cables but also installation of street lights and installation of transformers etc., which is taxable activity as mentioned in the said Circular and, therefore, the appellant should be put to terms.

On a query from the Bench, the appellant submitted that if it is held that the appellant is liable to pay Service Tax on account of installation of street lights, traffic lights and transformers etc., the liability will come down to Rs.3.5 lakhs approx.

The Bench observed –

"6.1 The lower appellate authority has not passed any interim stay order, but directed the appellant to make a pre-deposit at the time of personal hearing. The procedure adopted by the lower appellate authority is not permissible under law. Any order directing the party to pay any amount should be in writing and has to be tendered as per the provisions of Section 37C of the Central Excise Act, 1944. That has not been done in this case. Therefore, the matter has to go back to the appellant authority. However, inasmuch as the appellant has accepted the partial duty liability under the category of Erection, Commissioning and Installation Services on account of installation of lights, transformer etc., they have not made out a prima facie case for complete waiver of pre-deposit of dues adjudged against them.

6.2 Accordingly, we direct the appellant to pre-deposit of Rs.5 lakhs within a period of four weeks and report compliance before the lower appellate authority by 28.02.2013. On such compliance, the lower appellate authority shall hear the matter afresh and pass an order on merit after affording a reasonable opportunity of hearing to the appellant."

In fine, the appeal was allowed by way of remand and the stay application was also disposed of.

(See 2013-TIOL-547-CESTAT-MUM)