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2019 (12) TMI 1129
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....ompanies Act, 1956, having its registered office at Guwahati. For the period from April, 2013 to September,2016, though petitioner had submitted its service tax returns, because of financial constraints, it could not pay the service tax collected. According to the petitioner, total liability for the said period stood at Rs. 6,27,45,124.00. For realization of dues, respondent No. 2 issued notice to respondent No. 1 on 14.02.2017 and on subsequent dates under Section 87 (b) of the Finance Act, 1994 calling upon respondent No. 1 to pay to the credit of the Central Government the money held by respondent No. 1 in the bank account of petitioner being Bank Account No. 34890601572. 5. Petitioner had represented before respondent No. 2 to withdraw the garnishee notices and to allow the petitioner to operate such bank account. Further prayer was made to allow the petitioner to pay outstanding dues in installments. Respondent No. 2 informed the petitioner on 11.04.2017 that the garnishee notices could not be withdrawn. Regarding payment of dues on installments, it was stated that the matter was under consideration of the Commissioner. 6. Petitioner has stated that despite financial dif....
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....the petitioner on 20.02.2019, the said notices have been issued causing serious prejudice to the petitioner in the market. In support of her contention, learned counsel for the petitioner besides relying on the relevant provisions of the Finance Act, 1994 including Sections 73 and 75 thereof, has also placed reliance on a decision of the Karnataka High Court dated 29.04.2015 passed in WP(C)No.14054/2015 (Ms. Prashanthi Vs. Union of India) to contend that recovery proceedings dehors adjudication and quantification of service tax dues by the registered service tax provider is not permissible. On the other hand, Mr. Sharma submits that these notices were issued prior to passing of the interim order dated 20.02.2019. After the interim order was passed by this Court, Department has not taken any coercive measures against the petitioner. He further submits that petitioner has huge amount of dues to be paid and despite having credit worthiness, petitioner has not cleared the dues. In such circumstances, question of payment by installment perhaps may not be permissible. Submissions made by learned counsel for the parties have been considered. Related WP(C) No.1123/2019 ha....
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....hat having regard to Section 73 of the Finance Act, 1994, in a case where service tax is not levied or paid or short levied or short paid or erroneously refunded, the competent Central Excise Officer (now, GST Officer) shall issue show cause notice to the assessee within 30 months as to why the amount specified in the notice should not be paid. This period of 30 months is extendable upto 5 years in a case of fraud, collusion, willful mistatement etc. No such notice was issued to the petitioner within 30 months. Without issuing such show-cause notice under Section 73, impugned garnishee notices could not have been issued under Section 87 (b) of the Finance Act, 1994. Referring to Section 75 of the Finance Act, 1994, learned counsel submits in case of failure to pay tax or any part thereof within the period prescribed, simple interest @ not below10% and not exceeding 36% per annum may be levied. Therefore, though levy of interest in a case covered under Section 73 may be automatic, there is a wide range regarding payment of interest, i.e., between 10% to 36%. Application of mind and adjudication would be required for a particular rate of interest that may be imposed on a defaultin....
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....onthly installments. However, permission to pay dues in installments is subject to the condition that the authority must be satisfied that the assessee is not a frequent defaulter and that the financial condition of the defaulter is under temporary distress. In so far petitioner is concerned, balance sheets for the years 2013-2014 to 2017-2018 do not indicate any financial distress of the petitioner. Therefore, the facility of payment of arrear dues in installments may not be extended to the petitioner. He, therefore, submits that the writ petition is devoid of merit and is liable to be dismissed. 14. In her reply submissions, Ms Hawelia, learned counsel for the petitioner submits that petitioner is at present paying GST at the rate of Rs. 22 to 25 lacs per month and, therefore, if the entire amount of service tax dues is required to be paid at one go, petitioner may not be able to pay the same. On a query by the Court learned counsel for the petitioner submits that petitioner is in a position to pay installment of Rs. 6 lacs per month till the arrear service tax dues are cleared. Regarding the interest portion, she submits that the rate of interest has to be adjudicated upon be....
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....cts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "thirty months", the words "five years" had been substituted. Explanation.- Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years, as the case may be. (1A) Where any service tax has not been levied or paid or has been short-levied or short paid or erroneously refunded, by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of this Chapter or the rules made thereunder, with intent to evade payment of service tax, by such person or his agent, to whom a notice is served under the proviso to Sub-Section (1) by the Central Excise Officer, such person or gent may pay service tax in full or in part as may be accepted by him, and the interest payable thereon under Section 75 and penalty equal to twenty....
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....b-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section. (4) Nothing contained in sub-section (3) shall apply to a case 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) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. (5) The provisions of sub-section (3) shall not apply to any case where the service tax had become payable or ought to have been paid before the 14th day of May, 2003. (6) For the purposes of this section, "relevant date" means, - (i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid - (a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to wh....
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....toms; (b) (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 31 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 a 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 sent, fails to make the payment in pursuance thereof ....
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....e need and necessity to allow it to pay the dues in installments. Therefore, in a case where the assessee admits to the service tax dues as specified in the show cause notice or in the garnishee notice, no adjudication would be necessary. To that extent, decision of the Karnataka High Court in Prashanthi (supra), is distinguishable on facts. 23. Before dealing with the prayer of the petitioner for payment of service tax dues in installments, it would be apposite to first deal with the question of interest. As already noticed above, Section 75 of the Finance Act, 1994, deals with levy of interest on delayed payment of service tax. It provides for payment of simple interest at such rate not below 10 % and not exceeding 36% per annum for the period of delay. It is thus clear that the interest that may be imposed in case of delayed payment of service tax is not a fixed percentage but ranges between 10% to 36% indicating an element of flexibility. What would be the interest in a particular case would depend upon the facts and circumstances of that case for which discretion is vested on the competent officer. Such discretion perforce has to be exercised in a fair and judicious manner ....