Bank account unfrozen for appeal deposit after mandamus request by educational institution

The Court granted the petitioner's mandamus request to de-freeze their bank account for making a pre-deposit to appeal the service tax and penalty imposition. The petitioner, an educational institution, was allowed to operate the account solely for this purpose, with monitoring by the bank. The Court recognized the adverse impact of the frozen account on the petitioner's operations and directed respondents to facilitate the appeal process. Additional relief could be sought from the Appellate Tribunal, subject to compliance with the pre-deposit requirement.

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Issues:
- Mandamus to de-freeze bank account
- Dispute over service tax and penalty imposition
- Paralysis of day-to-day activities due to frozen account
- Right to appeal before CESTAT
- Permission to operate bank account for pre-deposit

Analysis:

The petitioner sought a mandamus to direct respondents 1 and 2 to de-freeze a bank account operated at the third respondent bank. The petitioner, an educational services institution, contested falling under the purview of educational institutions liable to pay service tax. The first respondent imposed service tax and penalty following a show cause notice. The petitioner's bank account was frozen due to non-payment of service tax, hindering daily operations and the ability to file a statutory appeal against the order. Respondents 1 and 2 argued that the petitioner had not filed the statutory appeal before CESTAT despite the order being passed earlier.

The Court acknowledged the petitioner's right to appeal before CESTAT against the order imposing service tax and penalty. Recognizing the account freeze's impact on the petitioner's activities, the Court directed respondents 1 and 2 to allow the petitioner to operate the bank account to make the pre-deposit required for filing the appeal. The petitioner was advised to file an interim application before the Appellate Tribunal for further relief, subject to no outstanding dues to the third respondent bank.

The judgment concluded by ordering respondents 1 and 2 to permit the petitioner to operate the bank account solely for the pre-deposit amount necessary for the appeal. The third respondent bank was instructed to monitor the account to ensure compliance with the pre-deposit limit. The petitioner was granted the option to seek additional interim relief from CESTAT, including access to the remaining account balance. No costs were awarded, and the connected miscellaneous petition was closed.

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