The Jharkhand High Court (HC) in its recent judgement held that the payment of Pre-Deposit is allowable when the assessee was unaware of the mandatory payment.
Mukesh Kumar Singh, the Petitioner is a non-registered dealer / Government contractor engaged in providing construction services to the State Government, on an impression that it is exempted from the levy of service tax as per Entry No. 12/12A of Notification No. 25/2012-ST dated 20.06.2012 (Annexure-1), did not pay the service tax liability, as a result of which, he was faced with a proceeding under show-cause notice dated 07.11.2019 (Annexure-2) issued by the Assistant Commissioner, Central GST & CX, Jamshedpur (Respondent No. 2).
Petitioner participated in the proceeding but was saddled with the liability of service tax to the tune of Rs. 1,87,392/- with interest and penalty, treating the same as the income of the petitioner (Annexure- 4). The appeal before the Commissioner (Appeals), CGST & C. Ex on 11.09.2020 has been dismissed on the sole ground of non-payment of mandatory pre-deposit.
The petitioner submitted that since the petitioner was an unregistered dealer, it was unable to make online payment of pre-deposit of interest/penalty. Petitioner was bearing the impression that since he is a Government contractor and services are exempted, he is not liable to take registration under the Act. However, since the appeal was dismissed only on the ground of non-payment of mandatory pre-deposit of 7.5% of the tax liability, he has preferred the instant writ petition.
It was submitted that since the petitioner was unaware of the facility of making online payments through the RBI Portal, he may be also allowed to make a pre-deposit so that appeal can be heard on merits.
Justice Deepak Roshan observed that there was no intention on the part of the petitioner to avoid payment of pre-deposit @7.5% as provided under the amended section 35F of the Central Excise Act, 1944.
The Court set aside the impugned order dated 12.02.2021 (Annexure-8) passed by the Commissioner (Appeals), Central GST & CX, Ranchi (Respondent No. 1) and held that “if the petitioner makes the mandatory pre-deposit within a period of four weeks, as indicated above, the appeal shall be heard on merits.”
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