2018 (9) TMI 395 - HC - Service Tax

De-freezing of Bank Account - bank account was freezed on the reason that the petitioner has failed to pay the service tax, in pursuant to a demand resulting out of the said order passed on 05.03.2018 - educational services. Held that - It is seen that the petitioner suffered an order in original dated 05.03.2018 passed by the first respondent imposing service tax as well as penalty. It is not in dispute that as against the said order, the petitioner has right of appeal before the CESTAT. It is also not in dispute that such appeal can be filed only by making pre-deposit of the statutory liability, as contemplated under the relevant provision of law, while filing such appeal. Since it is stated that freezing of the subject matter bank account has totally paralysed the petitioner s day to day activities, this Court is of the view that the respondents 1 and 2 shall have to permit the petitioner to operate the bank account initially, atleast for the purpose of effecting the pre-deposit, while filing the statutory appeal before the CESTAT - to that extent, the petitioner is entitled to operate the said account so that his right of filing of appeal before the CESTAT is not defeated for want of making pre-deposit. Petition disposed off.

Summary

Issues:
- Mandamus to de-freeze bank account
- Dispute over service tax and penalty imposition
- Paralysis of day-to-day activities due to frozen account
- Right to appeal before CESTAT
- Permission to operate bank account for pre-deposit

Analysis:

The petitioner sought a mandamus to direct respondents 1 and 2 to de-freeze a bank account operated at the third respondent bank. The petitioner, an educational services institution, contested falling under the purview of educational institutions liable to pay service tax. The first respondent imposed service tax and penalty following a show cause notice. The petitioner's bank account was frozen due to non-payment of service tax, hindering daily operations and the ability to file a statutory appeal against the order. Respondents 1 and 2 argued that the petitioner had not filed the statutory appeal before CESTAT despite the order being passed earlier.

The Court acknowledged the petitioner's right to appeal before CESTAT against the order imposing service tax and penalty. Recognizing the account freeze's impact on the petitioner's activities, the Court directed respondents 1 and 2 to allow the petitioner to operate the bank account to make the pre-deposit required for filing the appeal. The petitioner was advised to file an interim application before the Appellate Tribunal for further relief, subject to no outstanding dues to the third respondent bank.

The judgment concluded by ordering respondents 1 and 2 to permit the petitioner to operate the bank account solely for the pre-deposit amount necessary for the appeal. The third respondent bank was instructed to monitor the account to ensure compliance with the pre-deposit limit. The petitioner was granted the option to seek additional interim relief from CESTAT, including access to the remaining account balance. No costs were awarded, and the connected miscellaneous petition was closed.