2011 (2) TMI 981 - AT - Service Tax

Manpower supply srvices - Application for stay - Held that - This is a case where clearly the appellant had collected the service tax but failed to pay the tax to the government & even after proceedings were initiated the full tax is yet to be paid and there is a balance of Rs.1, 93, 144/- pending payment - stay order of the Commissioner requiring the appellants to deposit an amount of Rs.7.5 lakhs was not unreasonable and should have been complied with thus appellant should be required to deposit the amount as per the stay order of the Commissioner and accordingly direct the appellant to deposit this amount within six weeks and report compliance to Commissioner (Appeals) who will decide the appeal on merits after giving reasonable opportunity to the appellants.

Issues:
1. Non-payment of service tax by the appellant during a specific period.
2. Imposition of penalties under Section 76 & 78 of Finance Act, 1994.
3. Rejection of appeal due to non-compliance with the stay order requiring deposit.
4. Adjusting the pre-deposit amount towards outstanding service tax dues.
5. Financial difficulties claimed by the appellant for non-payment of service tax.

Issue 1: Non-payment of service tax
The appellant, engaged in providing manpower supply services, failed to pay service tax amounting to Rs.22,30,352/- from 16.06.05 to 31.03.07, despite collecting it from customers. The adjudicating authority confirmed the demand for service tax along with interest and penalties under Section 76 & 78 of the Finance Act, 1994.

Issue 2: Imposition of penalties
Penalties under Section 76 & 78 of the Finance Act, 1994 were imposed on the appellant for non-payment of service tax, which the appellant contended was contrary to the settled legal position. The Tribunal noted the imposition of penalties and the outstanding balance of Rs.1,93,144/- pending payment.

Issue 3: Rejection of appeal
The Commissioner (Appeals) rejected the appeal due to non-compliance with the stay order, which required the appellant to deposit Rs.7.5 lakhs. The Tribunal found the stay order reasonable, as even after the payment of Rs.7.5 lakhs, the appellant would have paid approximately 25% towards penalty and the full amount of service tax without considering the interest liability.

Issue 4: Adjusting pre-deposit amount
The appellant requested to adjust Rs.7,50,000/- towards pre-deposit out of the total payment made in September 2009. However, the Tribunal held that the amount paid was towards service tax dues for a different period and there was still a shortfall in the payment, justifying the Commissioner's decision not to adjust the amount towards pre-deposit.

Issue 5: Financial difficulties
The appellant claimed financial difficulties as a reason for not making service tax payments during the relevant period. The Tribunal acknowledged this claim but emphasized that the appellant had collected the service tax from customers but failed to remit it to the government, leading to the outstanding balance.

In conclusion, the Tribunal directed the appellant to deposit the required amount as per the stay order within six weeks and report compliance to the Commissioner (Appeals) for further proceedings, ensuring a reasonable opportunity for the appellant to present their case. The stay petition and appeal were disposed of based on these terms.

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