2016 (5) TMI 229 - HC - Service Tax

Evasion of service tax - cognizable offence and is hit by Section 89(1) - Violation of conditions of Bail - t bail granted to the appellant was on the basis of his undertaking that he shall make the entire balance amount within fifteen days from the date of release on bail. After bail was granted, he had filed writ petition on 23rd November, 2015 challenging the remand application. - Earlier the VCES application was rejected due to non payment of installment of 50% of the amount. Held that - Evidently, the applicant had gone back from his undertaking on the basis of which the Court had passed the order for release on bail and therefore, he lacked bona fide. - it was absolutely wrong on the part of the appellant to go back from the undertaking after securing release on bail and thereafter to challenge the remand application by filing the writ petition. Though the appellant in page 50 of the writ petition had admitted that a sum of ₹ 1,81,80,941/- is due and payable, however in paragraph 4 of the writ petition it has been stated that if adjudicated the amount would be less than ₹ 50 lakhs. So the stand of the appellant is inconsistent. Moreover, the orders of rejection have gone unchallenged. Therefore, the learned Judge was justified in dismissing the writ petition. The respondents are entitled to cost, which is assessed at ₹ 10,200/-. - Decided against the appellant

Summary

Issues Involved:
1. Whether the appellant had gone back from the undertaking.
2. Whether the remand application dated 8th September, 2015 filed by the service tax authorities is just and proper.

Detailed Analysis:

Issue 1: Whether the appellant had gone back from the undertaking.
The court found that the appellant had indeed gone back from the undertaking to pay the entire balance amount within fifteen days from the date of release on bail. The bail was granted on the basis of this undertaking, and the appellant's failure to comply with it demonstrated a lack of bona fide. The court emphasized that a person seeking discretionary relief under Article 226 of the Constitution must demonstrate unimpeachable bona fides. The appellant's failure to honor the undertaking and subsequent filing of the writ petition to challenge the remand application showed a lack of bona fide, justifying the summary dismissal of the writ petition.

Issue 2: Whether the remand application dated 8th September, 2015 filed by the service tax authorities is just and proper.
The appellant had collected service tax but failed to pay it to the Central Government, which constitutes a cognizable offense under Section 89(1) of the Finance Act, 1994. The appellant's applications under the Service Tax Voluntary Compliance Encouragement Scheme (VCES) were rejected due to incorrect declarations and ongoing proceedings, violating Section 106(1). Despite multiple extensions and requests for time, the appellant failed to make the necessary payments. Consequently, the service tax authorities issued a remand notice under Section 91(1) of the Finance Act, 1994. The court found that the remand application was justified as the appellant had not complied with the statutory requirements, and his actions warranted the initiation of recovery proceedings and potential punishment under Section 89(1)(ii) of the Act.

The court also noted that the appellant's reliance on certain judgments was misplaced as they did not pertain to service tax issues or situations where a party had reneged on an undertaking given in court. Furthermore, the appellant's inconsistent statements regarding the amount due further undermined his credibility.

Conclusion:
The court concluded that the appellant's failure to honor the undertaking and the subsequent filing of the writ petition demonstrated a lack of bona fide, justifying the dismissal of the writ petition. The remand application by the service tax authorities was deemed just and proper, given the appellant's failure to comply with statutory requirements and the cognizable nature of the offense. The appeal was dismissed, and the respondents were awarded costs of Rs. 10,200/-.