2014 (11) TMI 1166 - HC - Service Tax

Recovery of alleged dues - Whether in view of these facts it would be appropriate for the Court to entertain these proceedings under Article 226 by issuing a mandamus for the payment of seven bills stated to be totaling an amount of 2.65 crores? Held that - once a serious matter relating to the evasion of service tax is alleged and drawn to the notice of the first respondent by the revenue authorities and the first respondent has been informed both of the pending investigation as well as to disclose documentary material it cannot be held that the claim falls within that category where it can be ascertained that there is absolutely no defence or that a mandamus would be warranted - this is not a fit and proper case for exercising the discretion by the Court under Article 226 to entertain a petition seeking a mandamus for the payment of bills and the petitioner ought to be relegated to the ordinary civil remedy. Petition dismissed.

Summary

Issues:
1. Non-payment of bills by the first respondent to the petitioner.
2. Allegation of service tax evasion against the petitioner.
3. Whether a writ petition under Article 226 is maintainable for payment of bills.

Analysis:
1. The petitioner participated in a tender process and was awarded a contract for publication of advertisements but did not receive payment for seven bills totaling &8377; 2.65 crores. The petitioner sought a mandamus for payment under Article 226 of the constitution. The petitioner argued that the claim under the bills should be treated as admitted, citing a judgment of the Kerala High Court. However, the first respondent contended that the claim was not admitted and highlighted allegations of service tax evasion against the petitioner.

2. The first respondent alleged that the petitioner evaded service tax and failed to cooperate with the investigation. The revenue authorities accused the petitioner of collecting service tax but not paying it to the government. The first respondent was directed to provide documents related to payments made to the petitioner, service tax details, and contract agreements. These allegations raised doubts about the petitioner's conduct and financial dealings.

3. The Court considered whether to entertain the petition under Article 226 for the payment of the bills. Referring to the Kerala High Court judgment, the Court emphasized factors guiding the limitation of Article 226 jurisdiction in contractual matters. It noted that when serious allegations such as service tax evasion are involved, and when other civil remedies are available, exercising discretion under Article 226 may not be appropriate. The Court highlighted the availability of summary remedies under civil law for claims like the one presented by the petitioner.

4. Ultimately, the Court declined to exercise jurisdiction under Article 226, stating that the case was not suitable for a mandamus for bill payment. The Court suggested that the petitioner pursue ordinary civil remedies instead. No findings were made on the case's merits, and the petition was dismissed without costs. This judgment underscores the importance of evaluating the appropriateness of extraordinary remedies like mandamus in contractual disputes, especially when serious allegations are involved.