2013 (5) TMI 694 - HC - Service Tax

Court Criticizes DVC CTPS for Tax Non-Payment, Orders Corrective Actions

Damodar Valley Corpn. Versus CCE, Service Tax and Ors.

The court addressed issues of liability imposed on the petitioner without notice, criticized DVC CTPS for non-payment of service tax, confirmed assessment ... Service tax liability - petitioner submitted that he is not liable to pay any service tax and even if noticee is liable to pay service tax, penalty and interest, such liability cannot be fastened upon the petitioner without being any notice of assessment upon the petitioner. AO has shown sympathy to the persons who is liable to pay the tax, big brother, i.e., DVC, CTPC, Chandrapura - Held that:- Before consideration of the matter in detail, it will be appropriate to give notice to the AO -Rajiv Kumar Mishra, Additional Commissioner, Central Excise, Ranchi so that certain allegations may also be examined against the officers whether the order in question has been passed in bonafide exercise of power under the Statutory provision or it is something else, which would be adequately answered by the said officer himself, who has right to be heard before any observation. Meanwhile the operation of the impugned order in these petitions shall remain stayed. Issues involved:- Liability created against the petitioner without notice- Allegations against DVC CTPS for non-payment of service tax- Assessment order passed against M/s T.A. Enterprises- Direction to Preventive Wing and arrear recovery wing for corrective measuresIssue 1: Liability created against the petitioner without noticeThe judgment addresses the issue of liability created against the petitioner without notice. The petitioner, not being the assessee, was aggrieved by the liability imposed without proper notice. The Assessing Officer held the noticee liable to pay the entire service tax without giving the petitioner an opportunity to be heard. The petitioner argued that even if the noticee was liable, such liability could not be imposed on the petitioner without proper assessment notice. The court found it necessary to examine whether the order was passed in a bona fide manner and decided to issue notice to the Assessing Officer for clarification.Issue 2: Allegations against DVC CTPS for non-payment of service taxThe judgment extensively discusses the role of DVC CTPS in the non-payment of service tax by service providers. The Assessing Officer criticized DVC CTPS for not guiding their service providers to discharge proper service tax liability and for not paying due service tax on time. The court highlighted the responsibility of DVC CTPS towards the government and small businessmen. The Assessing Officer imposed penalties and interest on DVC CTPS for their involvement in the financial loss incurred by the noticee. The court directed corrective and punitive measures on DVC CTPS to prevent such incidents in the future.Issue 3: Assessment order passed against M/s T.A. EnterprisesThe judgment confirmed the payment of service tax on M/s T.A. Enterprises and imposed penalties and interest under relevant sections of the Act. The Assessing Officer held DVC CTPS responsible for the financial loss suffered by M/s T.A. Enterprises due to their failure to pay service tax on time. The court emphasized the importance of timely payment to avoid such situations.Issue 4: Direction to Preventive Wing and arrear recovery wing for corrective measuresThe court directed the Preventive Wing and arrear recovery wing to take corrective and punitive measures against DVC CTPS for non-compliance with the order. The aim was to ensure non-recurrence of similar incidents in the future. The judgment stayed the operation of the impugned order for the petitioner, pending further examination of the matter. No relief was claimed against the private party, and the cases were scheduled for further hearing on a specified date.