Case Law Details
Kaviyoor Service Co Operative Bank Ltd Vs Commissioner of Central Tax (Kerala High Court)
Introduction: The Kerala High Court recently addressed a writ petition filed by the Kaviyoor Service Co-operative Bank Ltd. The case involved an order passed by the Assessing Authority confirming a demand for service tax and penalties. The petitioner had appealed the decision to the Commissioner of Central Excise (Appeals), but the appeal was dismissed due to the non-compliance with mandatory deposit requirements. This article provides a detailed analysis of the case and the court’s decision.
Background: The petitioner, a cooperative bank situated at Kaviyoor, challenged an order dated 28.10.2021 by the Assessing Authority. The order confirmed a demand for service tax, Swatch Bharat Cess, and Krishi Kalyan Cess, totaling Rs. 2,43,306. Additionally, a penalty equal to 100% of the service tax amount was imposed under Section 78 of the Finance Act, 1994. The order also included penalties under Sections 77(1) and 77(2) of the Act.
Appeal to Commissioner: In response to the order, the petitioner filed an appeal (Ext.P2) before the Commissioner of Central Excise (Appeals), Ernakulam, under Section 85 of the Act. However, the appeal was dismissed (Ext.P3) as the petitioner had not complied with the mandatory deposit requirement of 7.5% of the assessed tax amount.
Legal Argument: The petitioner’s counsel argued that they would comply with the mandatory deposit requirement within ten days from the present date. They requested the court to allow the appeal to be heard and decided on its merits, subject to the deposit. The counsel also requested that any delay in filing the appeal should be considered with an application for the condonation of delay.
Court’s Decision: The Kerala High Court granted the petitioner the liberty to comply with the mandatory deposit requirement, as per Section 35F of the Central Excise Act. The court directed that once the petitioner deposited 7.5% of the tax demand, the appeal should be heard and decided on its merits. If any delay occurred in filing the appeal, the court instructed the application for condonation of delay to be considered according to the law.
Conclusion: The Kerala High Court’s decision allows the Service Tax appeal to proceed, provided the petitioner complies with the mandatory deposit requirement. This case underscores the importance of adhering to legal requirements when appealing tax-related decisions, ensuring that matters are heard on their merits while maintaining the necessary procedural compliance.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. The present writ petition has been filed under Article 226 of the Constitution of India by the petitioner, a Co-operative Bank situated at Kaviyoor. An order in original No.04/2021-22/ST-DC dated 28.10.2021 is passed by the Assessing Authority. The demand of service tax of Rs.2,27,085/-, Swatch Bharat Cess of Rs.8,110/- and Krishi Kalyan Cess of Rs.8,110/- totaling to Rs.2,43,306/- was confirmed under Section 73(2) of the Finance Act, 1994 (‘the Act’ for short). The penalty of the same amount i.e, Rs.2,43,306/- being 100% of the service tax was also confirmed under Section 78 of the Act. It was also provided that as per the proviso to Section 78, if the assessee makes the payment of service tax and interest and penalty within a period of thirty days from the date of receipt of the order, the penalty payable under Section 78 would be 25% instead of 100%. The penalty of Rs.2,500/- was also imposed under Section 77(1) of the Act and Rs.2,500/- under Section 77(2) of the Act.
2. Aggrieved by the said order in original, the petitioner filed Ext.P2 appeal before the Commissioner of Central Excise (Appeals), Ernakulam, under Section 85 of the Act. However, the petitioner did not make mandatory deposit of the 7.5% of the tax assessed and therefore, the appeal came to be dismissed by Ext.P3 order dated 08.2023 impugned in the present writ petition. The Appellate Authority has held that unless the condition of pre-deposit under Section 35F is not complied with, the appeal is not maintainable regardless of its merits.
3. The learned counsel for the petitioner submits that the petitioner will comply with the mandatory requirements and deposit of 7.5% of the tax within a period of ten days from today. If the petitioner deposits 7.5% of the demand in terms of Section 35F of the Central Excise Act, the appeal shall be heard and decided on merit. If there is any delay in filing the appeal, the application for condonation of delay also be considered in accordance with law.
4. With the aforesaid liberty, the writ petition stands finally disposed of.
