2016 (4) TMI 847 - HC - Service Tax

Seeking quash of summons - Section 14 of the Central Excise Act 1944 r/w Section 83 of the Finance Act 1994 - Non-payment of Service tax by the company - Held that - having given voluntary statements before the respondent the petitioners cannot now take a stand that the summons are vague and they are liable to be set aside. It is also pertinent to note that the petitioners have appeared before the respondent for enquiry pursuant to the summons issued and explained their case before the respondent. The petitioners could have produced all the relevant records before the respondent and made their submissions instead after giving voluntary statements admitting the non-payment of the Service Tax and giving an undertaking to discharge the outstanding Service Tax liability they cannot seek for quashing of the summons. It is open to the petitioners to produce all the relevant records before the respondent and file their objections and contest the matter in accordance with law. - Decided against the petitioner

Summary

Issues:
Petitioners challenging summons issued under Central Excise Act and Finance Act for non-payment of Service Tax, alleging vagueness and ambiguity in summons. Respondent initiating investigation against Company for outstanding Service Tax liability. Petitioners seeking quashing of summons, respondent defending summons as valid based on voluntary statements made by petitioners.

Analysis:
The petitioners, who are Directors of a Company registered for providing taxable services, challenged the summons issued by the respondent under Section 14 of the Central Excise Act, 1944 and Section 83 of the Finance Act, 1994. They alleged that the summons were vague and ambiguous, lacking proper reasons, details of documents to be produced, and advance notice as required by law. They contended that the respondent did not specify the purpose of the enquiry or the documents required, making the summons invalid.

The respondent, on the other hand, argued that the Company had shifted operations without informing the Department, leading to an outstanding Service Tax liability. The petitioners had admitted to non-payment of Service Tax and pledged to settle the liability during investigation. The respondent maintained that the summons were part of the ongoing investigation due to non-cooperation from the Company. The respondent highlighted the petitioners' voluntary statements acknowledging the non-payment of Service Tax, which they cannot now challenge as vague or invalid.

The Court examined the voluntary statements made by the petitioners, where they admitted the non-payment of Service Tax and promised to clear the outstanding liability. Considering these admissions and the petitioners' appearance for enquiry, the Court held that they cannot dispute the validity of the summons at this stage. The Court emphasized that the petitioners had the opportunity to present relevant records and contest the matter before the respondent instead of seeking to quash the summons after admitting to the non-payment of Service Tax.

Ultimately, the Court found no merit in the Writ Petitions and dismissed them, stating that the petitioners had admitted to the non-payment of Service Tax and undertaken to settle the outstanding liability. The Court rejected the petitioners' argument of vagueness in the summons and emphasized that they should have utilized the opportunity to present their case before the respondent. The judgment cited by the petitioners' counsel was deemed inapplicable to the present case due to differing circumstances.

In conclusion, the Court dismissed the Writ Petitions, ruling in favor of the respondent and closing the connected miscellaneous petitions without costs.