2017 (10) TMI 1059 - HC - Service Tax

Arrest of vessel - there is some surreptitious move by the defendant herein to see that vessel may travel further and the suit will become infructuous - Held that - The Port Officer and the Customs Authorities at Dahej are directed to arrest the vessel Bahrain Vision at present lying at Port of Dahej within the territorial waters of India and to keep the vessel under arrest until further orders of this Court. It is further ordered that the Port Officer and the Customs Officer at Dahej shall render all assistance to the plaintiff or its representative in effecting the warrant of arrest on the vessel Bahrain Vision.

Summary

Issues:
- Urgent circulation of documents to prevent infructuous suit
- Preponement of hearing due to attempts to frustrate proceedings
- Warrant for arrest of defendant vessel
- Admitted liability of service tax by owner
- Failure to pay outstanding service tax
- Necessity of vessel arrest to prevent irreparable harm
- Caveat entered by defendant
- Issuance and execution of warrant for vessel arrest

Analysis:
1. The urgent circulation of documents was allowed by the court to prevent the suit from becoming infructuous due to alleged attempts by the defendant to move the vessel. The plaintiff's advocate produced relevant documents and an undertaking, leading to the court issuing a warrant for the vessel's arrest to secure the plaintiff's interests.

2. The hearing was preponed based on the plaintiff's request, supported by a 'No Demand' certificate and a letter from the Custom Authority. The court, after hearing both parties, ordered the arrest of the defendant vessel, M V Bahrain Vision, to secure the plaintiff's claim for outstanding service tax.

3. The plaintiff established an admitted liability of service tax by the owner of the defendant vessel for sister vessels. Despite reminders and partial payments, a significant amount remained outstanding, leading to the plaintiff's need to file a suit and seek vessel arrest to prevent financial loss.

4. The failure to pay the outstanding service tax, based on incorrect claims by the defendant regarding tax rates and rebates, resulted in the plaintiff being liable to pay the amount to the government. The court found it necessary to arrest the vessel to prevent irreparable harm to the plaintiff.

5. The defendant's caveat, entered through an agency, raised objections to the arrest based on lack of awareness regarding certain documents. However, the court proceeded to issue and execute a warrant for the vessel's arrest at the Port of Dahej to secure the plaintiff's claim.

6. The court directed the Port Officer and Customs Authorities to effect the arrest, seizure, or detention of the defendant vessel, Bahrain Vision, and to render all necessary assistance to the plaintiff in executing the warrant. The plaintiff was permitted to communicate the court's order to relevant authorities for immediate action.