Facts of the Case

M/s Mukesh Kumar Singh, an unregistered dealer/government contractor providing construction services to the State Government, believed his services were exempt from service tax under Entry No.12/12A of Notification No.25/2012-ST dated 20.06.2012, and did not pay service tax. A show cause notice dated 07.11.2019 was issued, and by Order-in-Original dated 14.08.2020, he was held liable for service tax of Rs.1,87,392/- with interest, plus penalties under Sections 78, 77(1)(a), 77(1)(c)(ii) and 77(2) of the Finance Act, 1994 for financial year 2014-15. His appeal before the Commissioner (Appeals), CGST & Central Excise, Ranchi, was dismissed solely for non-payment of the mandatory 7.5% pre-deposit under Section 35F of the Central Excise Act, 1944 (as applicable to service tax appeals). He filed this writ petition, ultimately pressing only the limited ground that, being an unregistered dealer, he was unaware of the RBI-facilitated mechanism (RBI Instruction No. RBI/2008-09/165 dated 05.09.2008) for a "non-assessee" to make the online pre-deposit payment, and had no intention to avoid the deposit.

Issues Involved

  1. Whether an unregistered dealer's appeal could be dismissed solely for non-payment of mandatory pre-deposit without considering his practical inability to make an online payment.
  2. Whether the matter should be remanded to allow the pre-deposit to be made and the appeal heard on merits.

Petitioner's Arguments

  • As an unregistered dealer, he could not make the online pre-deposit payment and was unaware of the CBIC's "non-assessee" registration facility under ACES; he did not intend to avoid payment and should be allowed to make the pre-deposit now so the appeal could be heard on merits.

Respondent's Arguments

  • The appeal was rightly dismissed under Section 35F of the Central Excise Act, 1944, since payment of the mandatory pre-deposit is a statutory precondition; however, CBIC's own FAQ confirms that a non-assessee can register on ACES and that RBI has instructed banks to accept such payments.

Court Order / Findings

  • The Court found no intent on the petitioner's part to avoid the pre-deposit, and noted the departmental facility for unregistered/non-assessee dealers to make such payments.
  • The order dated 12.02.2021 dismissing the appeal for non-payment of pre-deposit was set aside.
  • The petitioner was directed to make the mandatory pre-deposit within four weeks, after which the appeal would be heard and decided on merits.
  • The Court expressly clarified it had not examined the merits of the underlying service tax demand.

Important Clarification

This is a Service Tax (Finance Act, 1994) matter concerning the pre-GST tax regime, decided by remand on a purely procedural pre-deposit issue; it says nothing about whether the underlying construction services were actually taxable. Unregistered dealers facing similar pre-deposit hurdles in legacy service tax appeals can point to the CBIC's ACES "non-assessee" registration route confirmed in this order.

Sections Involved

  • Finance Act, 1994 – Sections 77(1)(a), 77(1)(c)(ii), 77(2), 78 (service tax penalties)
  • Central Excise Act, 1944 – Section 35F (mandatory pre-deposit for appeals)

Decision – In Favour of

Petitioner (Mukesh Kumar Singh) – the appellate dismissal was set aside and the appeal remanded for hearing on merits upon payment of pre-deposit; no ruling was made on the underlying tax liability.

Case Details

Court: High Court of Jharkhand at Ranchi
Case Number: W.P.(T) No. 1524 of 2021
Coram: Acting Chief Justice Aparesh Kumar Singh and Justice Deepak Roshan
Date of Order: 31 January 2023

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