2016 (5) TMI 452 - HC - Service Tax

Seeking release of bank accounts - Unascertained and uncrystallized dues - Petitioner admitted the Service tax liability for the period 2010-11 till 2014-15 - Held that - the petitioner has to deposit sum of ₹ 5 crores with the respondents on or before 10th June, 2016 and produce proof of the same before the Registrar, of such deposit on that day. Time to make payment shall not be extended and no application will be entertained even during vacation by this Court. To enable petitioner to pay an amount of ₹ 5 crores in terms of our order, three bank accounts of the petitioner shall be released temporarily forthwith. Any default in compliance with the order shall result in the writ petition being dismissed without any further reference to this Court and these accounts can be reattached and refrozen.

Summary

Issues:
Petitioner seeks release of frozen bank accounts due to coercive action by respondents for unascertained tax dues.

Analysis:
The petitioner filed a petition under Article 226 seeking the release of frozen bank accounts by the respondents, who initiated coercive action to recover unascertained tax dues. The petitioner contended that although service tax had been collected from clients, it had not been deposited in the Government treasury, leading to interest and penalty liabilities. The Court noted that the petitioner admitted a service tax liability of ?12.77 crores for the period 2010-11 to 2014-15, totaling ?18 crores plus interest. The Court found no agreement with the petitioner's argument that a previous judgment interfering with freezing of accounts would apply to this case. The petitioner proposed a repayment schedule, acknowledging the outstanding amount. The Court emphasized the importance of timely compliance and ordered the petitioner to deposit ?5 crores with the respondents by a specified date, failing which the writ petition would be dismissed.

The Court considered the communication indicating non-payment of ?5 crores by a certain date, highlighting the petitioner's failure to adhere to the proposed repayment schedule. After hearing arguments from both parties, the Court issued specific directives in the order. The petitioner was instructed to deposit the specified amount by a set deadline and provide proof of deposit to the Registrar. The Court temporarily released three bank accounts to facilitate the payment. However, any default in complying with the order would result in dismissal of the writ petition without further reference to the Court, allowing for reattachment and refreezing of the released accounts. The Court emphasized strict adherence to the order's terms, disallowing extensions or applications for reconsideration, even during vacation periods.