Breach of undertaking bars discretionary writ relief; repeated service tax defaults justified departmental recovery action.

A litigant who secures bail on the basis of an undertaking and then fails to honour it cannot claim discretionary writ relief under Article 226 because such conduct shows lack of bona fides and breach of clean-hands principles. The Court also treated the departmental remand action as proper where there were repeated defaults in payment of declared service tax dues, rejection of some declarations, and non-compliance with the extended payment time. It noted that collected service tax had to be deposited to the Central Government and that failure to do so attracted the statutory recovery and penal framework under the Finance Act, 1994.

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Issues: (i) whether the appellant had gone back from the undertaking given to secure bail and thereby lacked bona fide for invoking writ jurisdiction; (ii) whether the remand application dated 8 September 2015 filed by the service tax authorities was just and proper.

Issue (i): whether the appellant had gone back from the undertaking given to secure bail and thereby lacked bona fide for invoking writ jurisdiction.

Analysis: The appellant had obtained bail on the basis of an undertaking to pay the balance service tax dues within fifteen days of release. The payment was not made and the writ petition was filed thereafter challenging the remand application. In proceedings under Article 226 of the Constitution of India, discretionary relief is available only to a litigant who approaches the Court with bona fide conduct and clean hands. A party who secures a benefit from the Court on a specific undertaking and thereafter disregards that undertaking cannot claim such equitable relief.

Conclusion: The appellant had gone back from the undertaking and was not entitled to discretionary writ relief.

Issue (ii): whether the remand application dated 8 September 2015 filed by the service tax authorities was just and proper.

Analysis: The record showed repeated defaults in payment of declared service tax dues under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, rejection of some declarations, and failure to comply with the time extended for payment. The Court also noted that service tax collected was required to be deposited to the credit of the Central Government and that failure to do so attracted the recovery and penal framework under the Finance Act, 1994. The appellant's reliance on adjudication under the scheme did not displace the consequences flowing from the admitted defaults and the unchallenged rejection orders.

Conclusion: The remand application was held to be just and proper.

Final Conclusion: The writ petition could not be sustained in view of the appellant's lack of bona fide and the validity of the departmental action under the service tax recovery and penal provisions; the appeal was dismissed.

Ratio Decidendi: A litigant who secures relief from the Court on the strength of an undertaking and then deliberately violates it cannot invoke discretionary writ jurisdiction, and failure to deposit collected service tax may be proceeded against under the statutory recovery and penal scheme.

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