2013 (10) TMI 581 - AT - Service Tax

Demand - Ground handling service - Held that - Appellant collected the entire amount of tax from their clients and retained with them. It is also submitted that tax was deposited after detection by the Department and even some portion of the tax was deposited after issue of show-cause notice - Appellant directed to predeposit the entire amount of interest and penalty - recovery of penalty stayed partly.

Summary

Issues:
Demand of tax for ground handling services provided to airlines, predeposit of interest and penalty, waiver of balance dues, stay on recovery during appeal.

Analysis:
The judgment delivered by Appellate Tribunal CESTAT CHENNAI involved addressing the demand of tax amounting to Rs.1,06,60,210/- for ground handling services provided to M/s. Sri Lankan Airlines Pvt. Ltd. and other non-scheduled airlines. The applicant had already paid the entire tax amount and did not dispute the demand. The Tribunal considered the submissions from both sides and noted that the tax had been collected from clients and retained by the applicant. The Department detected the tax evasion, and some payments were made after the issuance of a show-cause notice. The learned AR argued for the predeposit of interest and penalty, contending that the applicant should be directed to predeposit the entire amount.

The Tribunal, after careful consideration, agreed with the submission of the learned AR and directed the applicant to predeposit the entire amount of interest and Rs.25,00,000/- towards penalty within eight weeks. The compliance was to be reported by a specified date. Upon the deposit of the mentioned amounts, the predeposit of the remaining dues would be waived, and the recovery thereof stayed during the pendency of the appeal. This decision aimed to ensure that the interest and penalty amounts were secured while providing the appellant with the opportunity to challenge the tax demand through the appeal process.

In conclusion, the judgment highlighted the importance of complying with the predeposit requirements for interest and penalty in tax-related cases, balancing the interests of both the taxpayer and the tax authorities. The Tribunal's decision provided a structured approach to address the tax liabilities while allowing the appellant to pursue the appeal without immediate financial burden, ensuring a fair and transparent resolution process.