2016 (8) TMI 991 - HC - Service Tax

Recovery proceedings u/s 87 of the Finance Act, 1994 - Demand of tax with interest and penalty stay of further coercive measures on payment of demanded amount Held that - there will be no further coercive measures against the petitioner under Section 87 of the Finance Act, 1994, till such time the adjudication pursuant to a show cause notice issued to petitioner, it shall not be greater than six weeks petition dismissed decided in favor of petitioner.

Summary

Issues Involved:
1. Issuance of notice under Section 87 of the Finance Act without considering tax liability.
2. Rejection of petitioner's request to withdraw invocation of Section 87.
3. Stay on coercive measures against the petitioner.
4. Duration of stay on coercive measures.

Analysis:

1. The petitioner raised a grievance that a notice under Section 87 of the Finance Act was issued to them without considering the tax liability or issuing a show cause notice. The petitioner had already deposited a significant amount towards the tax liability but requested a formal demand notice. The court directed the petitioner to deposit a specific amount, and upon compliance, ordered a stay on further coercive measures under Section 87 of the Finance Act.

2. The respondent rejected the petitioner's request to withdraw the invocation of Section 87 of the Act. However, the court intervened and directed the petitioner to deposit a particular sum to prevent coercive actions. The petitioner complied with the court's order and deposited the required amount, leading to a stay on coercive measures by the department.

3. The court specifically ordered that no further coercive measures should be taken against the petitioner under Section 87 of the Finance Act until the adjudication process following a show cause notice is completed within a stipulated time frame of six weeks. This decision aimed to protect the petitioner from undue harassment while ensuring that the tax liability issue is resolved through due process.

4. The judgment concluded by dismissing the petition and ordering the decision to be issued physically. The court's decision to stay coercive measures and limit the duration of such stay demonstrates a balanced approach to address the petitioner's concerns while upholding the legal procedures outlined in the Finance Act.