Court directs timely decision on Service Tax scheme application, suspends recovery proceedings

The court issued an interim order directing the competent authority to decide on the petitioner's application under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, within 60 days. Recovery proceedings under Section 87 of the Finance Act, 1994, were suspended until the application's decision, allowing for the release of bank accounts. The court emphasized the importance of fulfilling scheme conditions before commencing recovery proceedings, ensuring a fair consideration of the petitioner's case and upholding the scheme's objectives.

---

---

Issues:
Challenge against summoning order, notice under Section 87 of the Finance Act, 1994, validity of garnishee order, application under Service Tax Voluntary Compliance Encouragement Scheme, 2013.

Analysis:

The writ petition challenges the summoning order, notice, and garnishee order issued under Section 87 of the Finance Act, 1994. The petitioner, a service provider, is directed to deposit a substantial amount as service tax. The petitioner admits the liability but contests the garnishee order, citing an application made under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, allowing for the payment of dues in installments. The petitioner argues that the garnishee order was issued prematurely, without considering the pending application under the scheme. The respondent contends that the application must meet the scheme's prescribed conditions to avail immunity from penalty and interest.

The court acknowledges the petitioner's compliance with the conditions under Sections 106 and 107 of the Finance Act, 1994, as amended by the Finance Act, 2013. It emphasizes that until the application is decided, recovery proceedings under Section 87 cannot proceed to prevent defeating the scheme's purpose. Consequently, an interim order is passed directing the competent authority to decide on the petitioner's application within 60 days. The court suspends the recovery proceedings, including the notice under Section 87, and orders the release of bank accounts until the application's disposal, with any adjustments subject to the petition's outcome.

In conclusion, the court's interim order ensures a fair consideration of the petitioner's application under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, emphasizing the importance of fulfilling scheme conditions before initiating recovery proceedings under Section 87 of the Finance Act, 1994. The judgment aims to uphold the scheme's objectives and provide relief to the petitioner pending the application's decision.

---