2020 (10) TMI 1035 - HC - Service Tax

Recovery of interest on the delayed payment of the Service Tax - HELD THAT - The applicants with a view to save the period of limitation may file the appeal before the CESTAT at the earliest but with a distinct understanding that the CESTAT shall not proceed to hear the appeal on merits as this Court is seized of the matter. Having regard to the issues raised in this litigation, we direct that till the next date of hearing, no coercive steps shall be taken towards the recovery of the demand. Due to paucity of time, it is not possible to hear this matter before Diwali break - let this matter be notified on 08.12.2020.

Summary

Issues:
1. Quashing of impugned order confirming Service Tax demand
2. Recovery of interest and penalty imposition
3. Alternative remedy of statutory appeal before CESTAT
4. Time limitation for appeal filing before CESTAT
5. Stay on coercive recovery steps till next hearing date

Analysis:

Issue 1: Quashing of impugned order confirming Service Tax demand
The applicants sought to quash the order dated 16.07.2020 passed by the Commissioner confirming a Service Tax demand of ?24,67,98,056 from the company. The impugned order also included the confirmation of interest recovery and imposition of a penalty. The applicants argued that they have a strong case on merits and should not be required to exhaust the alternative remedy of preferring an appeal before the CESTAT. The Court acknowledged the availability of the statutory appeal but considered the argument presented by the applicants.

Issue 2: Recovery of interest and penalty imposition
The impugned order not only confirmed the Service Tax demand but also mandated the recovery of interest at the applicable rate on delayed payment, along with the imposition of a penalty of a similar amount. The Court took note of these additional aspects while considering the request to quash the order. The applicants emphasized the urgency due to the impending expiration of the limitation period for filing an appeal before the CESTAT.

Issue 3: Alternative remedy of statutory appeal before CESTAT
Although the applicants had the option to appeal before the CESTAT, they argued against being compelled to pursue this alternative remedy. The learned Senior Counsel highlighted the merits of the case and the urgency of the situation, as the limitation period for appeal filing was approaching. The Court considered these arguments and provided directions to address the time constraint while ensuring the preservation of legal rights.

Issue 4: Time limitation for appeal filing before CESTAT
The urgency of the situation was underscored by the revelation that the period of limitation for filing an appeal before the CESTAT was set to expire imminently. The Court took this into consideration while deliberating on the appropriate course of action, balancing the need for timely action with the preservation of legal avenues for the applicants.

Issue 5: Stay on coercive recovery steps till next hearing date
Recognizing the time constraints and the impending Diwali break, the Court directed that no coercive steps should be taken towards the recovery of the demand until the next hearing date. This stay was intended to provide the applicants with the necessary time to address the legal proceedings effectively while ensuring that their rights were safeguarded during the interim period.

In conclusion, the Court acknowledged the complexities of the case, the urgency of the situation, and the need to balance legal procedures with practical considerations. The directions provided aimed to address the immediate concerns raised by the applicants while ensuring that the legal process was followed appropriately.