2015 (7) TMI 31 - HC - Service Tax

Challenge to legality and validity of demand notice -Initiation of recovery proceedings with out relying on earlier decision on the same matter i.e Circular No.967 /01/2013-CX dated 1.1.2013 declared non east by the court 8 months back - Contempt petition against excise Assistant Commissioner - Held that - With the legal position having been concluded by this Court more than 8 months back in the case of Manglam Cement Ltd. v. The Superintendent, Central Excise Range-III, Kota & Ors 2013 (4) TMI 102 - RAJASTHAN HIGH COURT dated 01-3-2013 ; and in no uncertain terms, this Court having pronounced the Circular in question non est insofar relating to the situation where the stay applications remain pending in the appellate fora, it sounds rather strange that the concerned Assistant Commissioner, Central Excise Division, Udaipur has at all chosen to issue the questioned notice on the basis of the same Circular. Prima facie, the aforesaid demand notice dated 12-9-2013 (Annex. F ) as also the communication dated 3/7-10-2013 (Annex. J ) are of a show of total disrespect to and defiance of the order passed by this Court. The order passed by this Court on 1-3-2013, both in its letter as also in its spirit, leaves nothing to doubt or guess that this Court has pronounced the impugned Circular dated 1-1-2013 non est in relation to the situation as obtaining in the present case. Any attempt to yet initiate to coercive proceedings on the basis of the this very Circular gives rise to serious questions on the approach and intentions of the respondents. Having regard to the circumstances, we feel impelled that even while admitting this writ petition and staying operation of the impugned order, a notice be issued to the Assistant Commissioner, Central Excise Division, Udaipur and the Additional Commissioner (Recovery), Central Excise Commissionerate, Jaipur-II to show cause as to why the proceedings for having committed contempt of the order of this Court dated 1-3-2013 as passed in DBCWP No. 1891/2013 be not initiated. - Stay granted.

Summary

Issues:
1. Legality and validity of demand notice dated 12-9-2013
2. Rejection of representation by petitioner
3. Impugned demand notice issued with reference to Circular No. 967/01/2013-CX
4. Contempt of court order dated 1-3-2013
5. Stay on operation of demand notice and communication dated 3/7-10-2013

Analysis:

1. The petitioner-assessee challenged the legality and validity of the demand notice dated 12-9-2013 and the communication dated 3/7-10-2013. The demand notice required the petitioner to deposit service tax, interest, and penalty imposed under Order-in-Original No. 47/2012/ST/JPR-II. The representation made by the petitioner was rejected in the communication dated 3/7-10-2013.

2. The petitioner filed an appeal and a Stay Application before the CESTAT, which was adjourned multiple times. The impugned demand notice was issued based on Circular No. 967/01/2013-CX, which had been declared non est by the Court in a previous decision. The representation made by the petitioner was also rejected with reference to the same Circular.

3. The Court had previously held the impugned Circular non est in cases where appeals with stay applications were pending. Despite this, the demand notice and rejection of representation were based on the same Circular. The Court found it disrespectful and defiant of the order passed.

4. The Court noted that the Circular had been declared non est more than 8 months prior, and the actions of the authorities were in direct contradiction to the Court's order. The Court considered initiating contempt proceedings against the Assistant Commissioner and Additional Commissioner for disregarding the Court's order dated 1-3-2013.

5. The Court admitted the writ petition, issued notices to the respondents, and stayed the operation of the demand notice and communication. The attachment of the petitioner's bank account was vacated, and further orders regarding the recovered amount were to be considered. The Court also directed the petitioner to provide the names of the current officeholders and initiated contempt proceedings against them.

6. The Court emphasized that the order and pendency of the writ petition would not affect the merit consideration of the appeal/stay application by the Appellate Authority. The Court took a strict stance against the authorities' actions and ensured that the petitioner's rights were protected in light of the previous Court decisions.