Pre-Deposit Payment Made By Parent Company Having Separate Service Tax Registration Amounts To Proper Compliance: Madras High Court

The petitioner/assessee has appealed against the final order passed by the Customs, Central Excise and Service Tax Appellate Tribunal, dismissing the appeal filed by the assessee for non-compliance with the conditions imposed for the grant of stay.

The Tribunal directed the assessee company to make a pre-deposit of Rs.20 lakhs and report compliance. At that relevant point of time, an application for merger of the assessee company with M/s. St.John Freight System Limited, was pending.

Taking note of the pendency of the merger proceedings, the parent company, St.John Freight System Limited, deposited the money as directed by the conditional order.

The assessee contended that the Tribunal had refused to accept the deposit as a proper compliance with the conditional order passed, because both the companies had separate service tax registrations. It now turns out that the parent company, which has deposited a sum of Rs.20 lakhs pursuant to the interim order, was under liquidation. The assessee cannot be penalised for the error. The assessee has to be given an opportunity to have its appeal heard on the merits.

The court stated that, without a doubt, the Tribunal was correct in concluding that the deposit made by the parent company, which had a separate service tax registration, could not be considered proper compliance.At the same time, the order of the Tribunal imposing a condition has been complied with. The court found that the rigid view of the tribunal would only result in the appeal being thrown out on technical grounds, resulting in a denial of opportunity to the assessee.

The court directed the department to treat the payment made by the parent company as a payment made by the appellant company for the purposes of compliance with the interim order alone.

"We therefore, set aside the order of the Tribunal. The appeal is restored to file. The Tribunal is requested to dispose of the appeal on merits," the court said.

Case Title: M/s.St. John CFS Part Pvt. Ltd. Versus The Commissioner of Central Excise

Case Number: M.P.(MD) No.1 of 2015

Dated: 08.04.2022

Counsel For Petitioner: Advocate K.Vaitheeswaran