TaxTMI 
TaxTMI 
2017 (5) TMI 1200
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....nd claim of Rs. 3,54,65,218/- which was sanctioned vide Order-in-Original No. 7/2010 dated 18.06.2010. The said refund claim included the refund in respect of service tax paid vide invoice No. 10028762A dated 11.02.2010 which was paid by the appellant under reverse charge mechanism. The service tax was paid by appellant with delay. The department was of the view that even though refund was sanctioned, an amount of Rs. 30,05,219/- is to paid by appellant towards interest. The Department intimated the appellant that they are liable to interest. To this the appellant vide letter dated 28.01.2011 replied contending that they are not liable to pay the interest. In reply, the Department issued another letter dated 13.06.2011 directing the appellant to pay the interest and on failure, proceedings will be initiated to recover the amount as per law. 3. Later, the appellant had filed another refund claim for Rs. 1,70,0,844/-. Though the original authority vide order dated. 22.06.2010 sanctioned the entire refund, an amount of Rs. 30,05,219/- was appropriated towards the interest allegedly due to the Department as stated in the above para....
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....artment has issued letter dated 13.06.2011 stating that in accordance with the Boards instructions/clarifications the appellant is liable to pay the interest on delayed payment of tax, and therefore requested the appellant to pay the interest amount immediately. It was also stated therein that, in case of failure to pay, the Department will proceed to recover the interest amount as per law. Apart from this letter, there has been no Show Cause Notice or adjudication proceedings to determine the liability to pay interest. She asserted that it is incumbent upon the Department to issue a Show Cause Notice when the appellant disputed the liability to pay the interest. Without determination as to whether the amount of interest is due and payable, the Department cannot proceed to recover the amount under Section 87 of the Finance Act, 1994. That therefore, such appropriation/adjustment made by the Department while sanctioning the refund claim is against law and requires to be set aside. She drew support from the judgments in the case of Intas Pharma Ltd., Vs. CST, Ahmedabad [2013 (32) STR 543 (Tri.-Ahmd.)], Prashanthi Vs. Union of India [2016 (41) STR 3....
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....t and the appellant vide letter dated 28.01.2011 had raised dispute regarding their liability to pay the interest. Another fact which remains undisputed is that the service tax paid vide invoice dated 11.02.2010 has been refunded to the appellant. At this juncture it would be worthwhile to reproduce Section 73 as well as Section 87 of the Finance Act, 1994 which is as under: "73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. - (1)Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within eighteen months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) &....
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....aid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such 2payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid : Provided that the Central Excise Officer may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of "one year" referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation. - For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person und....
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....; (i) the Central Excise Officer may, by notice in writing, require any other person from whom money is due or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount; (ii) every person to whom a notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary; (iii) in a case where the person to whom a notice under this section is....
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.... do not dispute their liability to pay the service tax. The same has been paid under the self assessment method by filing returns under Section 70 of the Act. Though the tax was paid with delay they have not paid the interest upon the said amount. Sub-section (1B) speaks about payment of service tax as well as interest which is not paid or short paid in self assessment method and recovery of the same can be initiated under Section 87 without service of notice. Thus after introduction of this sub-Section, in case the appellant fails to pay the service tax or interest thereon, under the self assessment method, the amount can be recovered without service of notice. The said Section has come into force only with effect from 14.05.2015. The amendment is brought in by way of insertion and not any clarification. The period in the present case being prior to 14.05.2015 it was incumbent upon the Department to issue a Show Cause Notice and initiate proceedings for the determination of the amount due and payable by the appellant before initiating recovery under Section 87 of Finance Act, 1994. The judgment in the case of Prashanthi Vs. Union of ....
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....ious approval of the Commissioner of Central Excise (Commissioner of Service Tax) such attachment had been made. The perusal of the said garnishee notices would clearly indicates that respondents-5 to 8 have been called upon to divert the funds held by them on behalf of the service provider namely, M/s. RMS. The said garnishee notices would also indicate that in exercise of the power vested under Section 87(b) of the Finance Act, 1994 the monies are called for from the garnishees. This Court is of the considered view that power vested under Section 87(b)(i) & (ii) of the Finance Act, 1994 can be exercised only after adjudication of the show cause notice is concluded. In other words, resort to Section 87 of the Finance Act, 1994 can be had for recovering the amounts determined to be due from the service provider and not prior to that. The scheme of the Finance Act in general and Section 73C in particular, would clearly indicate that the authorities in order to protect the interest of the revenue can provisionally attach any property belonging to the person on whom notice is served under sub-section (1) of Section 73 or sub-section (3) of Section 73A as the case may be, during the pe....
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....the assessee on the basis of such assessment. It can thus be clearly seen that when an assessee is liable to pay tax in either of the situations, i.e., filing a return or not filing a return, the Central Excise Officer is empowered to assess the value of taxable services, to the best of his judgment and determine the sum payable by assessee or refundable to the assessee. 42. It is contended by Shri Pradeep Jetly that Section 73 of the said Act would not be applicable to the present case, inasmuch as, the very first line shows that the provisions can be invoked when the tax has not been 'levied or paid'. The learned Counsel submits that when the assessee has paid the tax, provisions of Section 73 cannot be invoked. We find that the said contention deserves to be heard only to be rejected. On one hand, Revenue coerces assessee to pay Service Tax on threat of taking action under Section 87 of the said Act, which can have drastic consequences, such as sealing, attaching accounts of bank, etc., and when an assessee succumbs to the said pressure and deposits the sum under protest, innocuous argument is made that since now payment is made, provisions of Section 73 cannot be invoked. It i....