2013 (10) TMI 96 - HC - Service Tax

Recovery - Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Held that - petitioner has prima facie demonstrated that he fulfills the conditions under prescribed Section 106 and 107 of the Finance Act, 1994 as amended by Finance Act, 2013 and that unless application is considered and decided, no proceedings under Section 87 may be allowed to continue. The object of the Service Tax Voluntary Compliance Encouragement Scheme, 2013 may be defeated, if the recovery is allowed to proceed. Petitioner s application under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 made on 20th June, 2013 to be decided by the Commissioner of Central Excise (competent authority) within a period of 60 days from today. The petitioner will file certified copy of this order with the competent authority within a week. We further direct that until disposal of the application dated 20th June, 2013, the recovery proceedings including operation of the impugned notice dated 7.6.2013 under Section 87 of the Finance Act, 1994 issued by the Deputy Commissioner (AE), Central Excise and Service Tax Noida shall remain suspended. The bank accounts shall be released by the respective banks. Any amount adjusted will be subject to result of the writ petition - Decided in favour of assessee.

Summary

Issues:
Challenge against summoning order, notice under Section 87 of the Finance Act, 1994, validity of garnishee order, application under Service Tax Voluntary Compliance Encouragement Scheme, 2013.

Analysis:

The writ petition challenges the summoning order, notice, and garnishee order issued under Section 87 of the Finance Act, 1994. The petitioner, a service provider, is directed to deposit a substantial amount as service tax. The petitioner admits the liability but contests the garnishee order, citing an application made under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, allowing for the payment of dues in installments. The petitioner argues that the garnishee order was issued prematurely, without considering the pending application under the scheme. The respondent contends that the application must meet the scheme's prescribed conditions to avail immunity from penalty and interest.

The court acknowledges the petitioner's compliance with the conditions under Sections 106 and 107 of the Finance Act, 1994, as amended by the Finance Act, 2013. It emphasizes that until the application is decided, recovery proceedings under Section 87 cannot proceed to prevent defeating the scheme's purpose. Consequently, an interim order is passed directing the competent authority to decide on the petitioner's application within 60 days. The court suspends the recovery proceedings, including the notice under Section 87, and orders the release of bank accounts until the application's disposal, with any adjustments subject to the petition's outcome.

In conclusion, the court's interim order ensures a fair consideration of the petitioner's application under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, emphasizing the importance of fulfilling scheme conditions before initiating recovery proceedings under Section 87 of the Finance Act, 1994. The judgment aims to uphold the scheme's objectives and provide relief to the petitioner pending the application's decision.