2017 (2) TMI 945 - HC - Service Tax

Maintainability of appeal - pre-deposit - Held that - the approach as is evident is hypertechnical. Tribunals are meant to render justice. They are not established to shut out parties on hypertechnicalities. Once the technicalities have to take a back seat on such issues and which have larger repercussions then the Tribunals would be well advised not to go ahead and insist on compliance with their procedural directions or their interim orders to such an extent as would make it impossible for the appellants to have disposal of their appeals on merits. Even now what we have found is that the Tribunal insists that pre-deposit as mandated by Section 35F of the Central Excise Act 1944 is an order prevailing and binds the assessee. It cannot be recalled even when there are subsequent developments. The Tribunal should be aware that just as it has power to impose conditions while passing interlocutory or interim orders equally there is an inherent and implicit power to modify them in the event the changed circumstances so demand - appeal to be restored.

Summary

Issues:
1. Appeal against orders denying certain benefits in relation to service tax.
2. Compliance with pre-deposit conditions imposed by the Tribunal.
3. Tribunal's power to modify interim orders for the ends of justice.

Analysis:
1. The appeal before the High Court concerned the denial of certain benefits related to service tax by the Customs, Excise & Service Tax Appellate Tribunal. The appellant was issued Show Cause Notices for recovery of service tax under different categories for specific periods. Despite furnishing detailed replies and attending personal hearings, the demands were confirmed, leading to an appeal to the Tribunal and subsequent dismissal due to non-compliance with a pre-deposit condition.

2. The Tribunal's conditional order required the appellant to deposit a substantial sum pending the appeal, which was not reported, resulting in dismissal of the appeal without adjudication on merits. The High Court criticized the Tribunal's insistence on compliance with the pre-deposit condition, emphasizing the need for justice over procedural formalities. The Court highlighted the Tribunal's duty to facilitate the disposal of appeals on merits rather than imposing technical barriers, citing the power to modify interim orders based on changed circumstances for the ends of justice.

3. The High Court directed the Tribunal to restore the appeal without insisting on compliance with any pre-deposit or conditional order. It instructed the Tribunal to hear both sides, adjudicate the appeal on merits promptly, and set aside the impugned orders. The Court clarified that it did not express any opinion on the merits of the controversy raised in the appeal, ultimately disposing of the case while emphasizing the importance of ensuring justice and fairness in legal proceedings.