2013 (11) TMI 302 - HC - Service Tax

Attachment of bank account - Withdrawal from the account not allowed Amount due to the Revenue Held that - Whatever liability has been incurred by the petitioner for the period post August 2013 ought to be discharged by the petitioner in accordance with law and the petitioner will file an undertaking with the respondents that the petitioner will discharge its liability from the month of September, 2013 onwards in accordance with law - The order for releasing the attachment of bank accounts will come into operation upon deposit of ₹ 8.00 lacs and filing an undertaking with the revenue - the order will ensure to the benefit of the petitioner only till a decision is taken on the application for settlement under the scheme - Decided in favour of Petitioner.

Summary

Issues:
Challenge to notice under Section 87(b) of the Finance Act 1994 regarding service tax arrears and attachment of bank accounts.

Analysis:
1. The petitioner challenged a notice issued by the Superintendent, Group X, Anti Evasion, Service TaxII, Mumbai, directing the petitioner's bankers not to allow any withdrawal from the account to the extent of Rs.1.22 crores due to the revenue from the petitioner.

2. The petitioner detailed the demand/arrears of service tax of Rs.1.22 crores, highlighting the gross liability, utilization of Cenvat Credit, service tax already paid, and net liability for different periods. The petitioner applied for the Service Tax Voluntary Compliance Encouragement Scheme, aiming to pay only 50% of the outstanding liability by a specified date.

3. The respondents contended that until the petitioner's application under the Scheme is accepted, the liability to pay the outstanding service tax remains. The petitioner's claim of utilizing Cenvat Credit is subject to verification by the revenue.

4. The judgment noted that the demand for Rs.1.22 crores was based on a statement made by the petitioner's Director, admitting the liability but also mentioning the available Cenvat Credit. The court proceeded on the basis that a portion of the Cenvat Credit had been utilized to discharge dues. It was determined that an amount of approximately Rs.32 lakhs is payable as service tax for the period prior to 31 December 2012.

5. The court directed the revenue to vacate the attachment of the petitioner's bank accounts upon depositing 50% of Rs.16 lakhs, subject to the petitioner's application for settlement under the scheme being accepted. The petitioner was also directed to undertake to discharge liabilities post-August 2013 in accordance with the law.

6. The order for releasing the attachment of bank accounts was contingent upon depositing Rs.8.00 lakhs and filing an undertaking with the revenue. The court clarified that the order would benefit the petitioner until a decision is made on their application for settlement under the scheme.

7. The writ petition was disposed of in the above terms, providing relief to the petitioner subject to compliance with the specified conditions and ongoing proceedings related to the Service Tax Voluntary Compliance Encouragement Scheme.