2015 (5) TMI 383 - HC - Service Tax

Seizure of bank account - Default of payment of service tax - petitioners did not register themselves with the service tax department for rendering various service to the consumers and collecting fee - Held that - to realize the service tax amount due and payable by the petitioners, the respective respondent had issued instructions to the respective bank where the petitioner is maintaining their account. Pursuant to such order to freeze the bank account, the service tax amount due and payable by the petitioners have been realized. Therefore, no relief could be granted to the petitioners in these writ petitions. It is also brought to the notice of this Court that the petitioners have assailed the final order passed by the respective respondent for recovery of service tax amount with penalties before the appellate authority and the appeals filed by them are pending. - Decided against assessee.

Summary

Issues:
Challenging notices freezing bank accounts for non-payment of service tax by Municipalities.

Analysis:
The petitioners, Municipalities responsible for water distribution, faced notices from the tax department for non-payment of service tax. They argued ignorance of service tax obligations and pending writ petitions as reasons for non-collection. Despite explanations, the tax department demanded payment along with penalties. The petitioners appealed to the Commissioner of Central Excise (Appeals) seeking relief and interim stay.

The judgment detailed multiple cases of Municipalities facing similar issues with freezing of bank accounts due to non-payment of service tax. Each Municipality received show cause notices, provided replies citing pending appeals, and faced bank account freezes. The petitioners sought rectification under the Finance Act, which was pending. They filed appeals before the Commissioner of Central Excise (Appeals) to challenge the tax demands and penalties imposed.

The court acknowledged the financial strain on Municipalities due to frozen bank accounts affecting staff salaries and operational expenses. The petitioners requested timely disposal of their appeals by the Appellate Authority. Consequently, the court directed the Commissioner of Central Excise (Appeals) to expedite the disposal of the pending statutory appeals within one month from the date of the court order.

In conclusion, the writ petitions filed by the Municipalities were dismissed, with no costs imposed. The court emphasized the importance of resolving the appeals promptly to alleviate the financial hardships faced by the Municipalities. The judgment aimed to ensure a fair and timely resolution of the tax disputes while recognizing the challenges faced by the petitioners.