2018 (12) TMI 1627 - HC - Service Tax

Freezing of Bank accounts of the petitioner - grant of installments for payment of dues - petitioner claims financial distress to pay the admitted liability under the service tax laws - Held that - There is an admitted liability so far as the petitioners are concerned. The Central Board of Excise and Customs circular dated February 28, 2015, which contemplates that, the instalments may be granted is qualified. The instalments can be granted to an entity who is in financial distress - In the present case, there is nothing on record to establish financial distress. Balance sheet of the company is not on record. The petitioners not having made available such relevant documents to Court and the petitioners not being in a position to secure the claim of the department, no fruitful purpose would be subserved by staying the operation of the letter dated October 23, 2018 - The balance of convenience and inconvenience is not in favour of grant of such order. In the event, the order of freezing of account is lifted, the petitioners would be in a position to take away the money from such account and defraud the revenue. Petition dismissed.

Summary

Issues:
1. Direction for withdrawal of a frozen bank account.
2. Petitioners seeking to pay admitted liability in instalments.
3. Consideration of financial distress for granting instalments.
4. Requirement of providing security for payment.
5. Lack of evidence of financial distress.
6. Balance of convenience and inconvenience for granting the order.
7. Dismissal of the writ petition.

Analysis:
The petitioners sought a direction to withdraw a letter freezing their bank account issued by the respondent. The petitioners, facing financial distress, requested to pay the admitted liability under service tax laws in instalments. However, the court noted that the Central Board of Excise and Customs circular allows instalments for entities in financial distress. The petitioners failed to establish financial distress adequately, as the complete balance sheet was not provided, undermining their claim. As the petitioners couldn't secure the department's claim and failed to offer any security, the court found no merit in staying the freezing of the account.

The court emphasized that the balance of convenience and inconvenience did not favor granting the petition as lifting the freeze could enable the petitioners to withdraw funds and defraud the revenue. Consequently, the court dismissed the writ petition, highlighting that without evidence of financial distress and inability to provide security, staying the freezing order would serve no purpose. The lack of complete financial documentation and failure to secure the department's claim led to the dismissal of the petition.

Therefore, the court ruled in favor of the respondent, dismissing the petition and not awarding any costs. The urgent certified website copies of the order were to be made available to the parties upon compliance with formalities, concluding the judgment.