Continuing service tax default treated as ongoing offence, keeping the statutory threshold applicable and defeating bail.

Non-deposit of collected service tax was treated as a continuing offence for applying the cognizable and punitive provisions under the Finance Act, 1994. The Court held that the outstanding amount existing on the relevant date had to be considered under Section 89(1)(d)(ii), and that the liability remained above the statutory threshold. Because the investigation was still pending and the statutory conditions for bail were not satisfied, release on bail was refused and the application was dismissed.

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Issues: Whether the applicant was entitled to bail in connection with alleged failure to deposit collected service tax, and whether the outstanding liability had to be treated as a continuing offence for determining the applicability of the cognizable offence provisions under the Finance Act, 1994.

Analysis: The applicant had collected service tax but failed to deposit the bulk of it with the Central Government. The Court treated the default as a continuing offence and held that the outstanding amount existing on the relevant date had to be taken into account for the purpose of Section 89(1)(d)(ii). On that basis, the liability was considered to be well above the statutory threshold. The investigation was also still pending, and the Court found that the applicant was not entitled to release on bail.

Conclusion: Bail was refused, and the application was dismissed.

Ratio Decidendi: Non-deposit of collected service tax constitutes a continuing offence, and the entire outstanding amount due at the relevant time is relevant for applying the cognizable and punitive provisions under the Finance Act, 1994.

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