Protective demand in case of filing appeals in refund matters, Service Tax

[Aruldas Chettiar]

Whether Protective demand is to be issued in case of filing appeals in refund matters

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Unless the operation of order-in-original passed in respect of a show cause notice is stayed by the high Court or Supreme court under Article 226 or Article 32 of the Constitution of India, the department is not debarred in issuing protective show cause notices for subsequent period. OR

If an injunction is granted by the High Court against issue of show cause notice then the department is debarred from issuing protective demands for subsequent period.

Commissioner (Appeals) and CESTAT are empowered only to stay payment of pre-deposit of duty demanded and penalty imposed under Section 35F of Central Excise Act, 1944 when appropriate application for stay is moved. This is prior to 6.8.2014 (date of enactment of Finance (No.2) Bill 2014). After this date you have to compulsorily make pre-deposit @ 7.5% (when appeal is preferred to Commissioner (Appeals)) and 10% when further appeal is preferred to CESTAT. Commissioner (Appeals) and CESTAT, being the creature of Central Excise Act, 1944, they cannot stay issue of show cause notice. Only High Court and Supreme Court can do that in exercise of their extra=ordinary jurisdiction only, that too in extreme situations.