2011 (11) TMI 87 - HC - Service Tax

Power of Excise Commissioner-Service Tax payable-property attached by Excise commissioner-Appeal pending before court- Held that -Section 87 of the Act in plain terms empowers the Central Excise Officer to proceed to recover the amount of demand by one or more modes mentioned therein. Section 87 (c) empowers the Central Excise Officer to distrain any movable and immovable property until the amount payable is paid. The power is not circumscribed by any condition. The condition precedent is that the amount of service tax levied remains payable when the power is exercised. The pendency of an appeal before the CESTAT or the Commissioner (Appeals) or before this Court does not in any manner whittle down the power under Section 87(c) of the Act. - Petitioner failed comply with the stay orders - decided against the assessee.

Issues:
1. Validity of notices of attachment under Section 87(c) of the Finance Act, 1994
2. Provisional attachment of property under Section 73C of the Act
3. Jurisdiction under Section 87(c) of the Act in light of pending appeal
4. Compliance with the court's order for pre-deposit under Section 35F of the Central Excise Act

Analysis:

Issue 1: Validity of notices of attachment under Section 87(c)
The petitioner challenged the legality of the notices of attachment issued under Section 87(c) of the Finance Act, 1994, for recovery of service tax and penalties assessed by the Commissioner. The petitioner argued that the direct attachment under Section 87(c) was arbitrary, emphasizing potential hardship if movable property like vehicles and furniture were seized. The court noted that the power under Section 87(c) is not subject to specific conditions and remains enforceable even during the pendency of appeals before higher authorities. The court dismissed the petitioner's contention, affirming the authority's right to proceed with recovery actions.

Issue 2: Provisional attachment under Section 73C of the Act
The petitioner's counsel contended that Section 73C of the Act allowed for provisional attachment of property, making direct attachment under Section 87(c) illegal. The petitioner highlighted potential hardships on the business and students if assets were seized. However, the court ruled that the provisional attachment provision did not preclude the exercise of power under Section 87(c) and upheld the authority's actions in attaching the property.

Issue 3: Jurisdiction under Section 87(c) in light of pending appeal
The court considered whether the appeal filed by the petitioner against the Commissioner's order affected the jurisdiction under Section 87(c) of the Act. The court clarified that the pendency of the appeal did not limit the authority's power to recover the outstanding amount. The court emphasized that non-compliance with court orders for pre-deposit did not mitigate the obligation to pay the outstanding dues.

Issue 4: Compliance with court's order for pre-deposit under Section 35F
The court directed the petitioner to deposit a portion of the service tax and penalty amount as a pre-deposit under Section 35F of the Central Excise Act to proceed with the appeal. However, the petitioner failed to comply with this order, leading the court to dismiss the writ petition. The court reiterated that the petitioner's failure to meet the pre-deposit condition did not absolve them of the liability to pay the outstanding dues as per the court's directive.

In conclusion, the court dismissed the writ petition, upholding the authority's right to proceed with recovery actions under Section 87(c) of the Finance Act, 1994, despite the pending appeal and the petitioner's non-compliance with the court's pre-deposit order.

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