Supreme Court grants stay on service tax arrears, sets deposit terms The Supreme Court granted leave for a stay of arrears of service tax under sections 65 and 66 of the Finance Act, 1994. The appellant was directed to ...
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Supreme Court grants stay on service tax arrears, sets deposit terms
The Supreme Court granted leave for a stay of arrears of service tax under sections 65 and 66 of the Finance Act, 1994. The appellant was directed to deposit 50% of the arrears in three instalments and provide a solvent surety for the remaining 50%. An affidavit undertaking to pay the balance was required within four weeks. Failure to comply would result in vacation of the stay order. The Court clarified that there was no stay on future liability towards service tax from 1st October, 2011. Non-compliance with depositing instalments would lead to vacation of the stay order.
Issues involved: Stay of arrears of service tax u/s 65 and 66 of the Finance Act, 1994, future liability towards service tax u/s 65 and 66 of the Finance Act, 1994.
Stay of arrears of service tax: The Supreme Court granted leave and directed the appellant to deposit 50% of the arrears towards the service tax in three equated instalments before specific dates. The appellant was also required to provide a solvent surety for the remaining 50% to the satisfaction of the jurisdictional Commissioner. An affidavit undertaking to pay the balance arrears was to be filed within four weeks, and the successful party would be entitled to interest on the amount stayed by the Court. The interim order specified that any default in depositing instalments would result in vacation of the stay order, allowing the department to recover the balance amount.
Future liability towards service tax: The Court clarified that there was no stay of imposition of service tax under sub-clause (zzzz) of clause (105) of Section 65 read with Section 66 of the Finance Act, 1994, concerning the future liability towards service tax from 1st October, 2011. The order emphasized the importance of filing the requisite affidavit within four weeks to avail of the interim stay order. The Court further highlighted that failure to deposit instalments as directed would lead to the vacation of the stay order, enabling the department to recover the outstanding amount in accordance with the law. The judgment was tagged with Civil Appeal No. 8390 of 2011.
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