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2023 (4) TMI 405 - HC - Service TaxRecovery of tax from third party - Payment of amount owed by GAIL to respondent no.2 - assessee in default - GAIL s case as set out in the present petition is that it has not admitted that any amount is due and payable to respondent no.2 and there is no question of GAIL making any payment to respondent no.1 on account of any amount due to respondent no.2 - HELD THAT - It is relevant to note that the impugned order is based on the premise that GAIL owes sums in excess of ₹13,13,07,485/- to respondent no.2. However, GAIL has never admitted the said amount as due and payable. The order passed by respondent no.1 is in the nature of a garnishee order. Plainly, respondent no.1 cannot compel GAIL to pay any amount which is not due and payable by GAIL to respondent no.2. The impugned order is not open ended and directs GAIL to deposit an ascertained sum of money - In the given facts, it is clear that the impugned order directing GAIL to pay a sum of ₹13,13,07,485/- is not sustainable. There is no material to show that any such amount is due and payable by GAIL. GAIL and respondent no.2 are ad-idem that the only amount that GAIL is required to pay is approximately ₹6.54 crores after respondent no.2 has issued the invoice of ₹1.01 crores - the impugned order is set aside. However, this Court also considers it apposite to restrain GAIL from making any payments to respondent no.2 for a period of four weeks from today. The petition is disposed off.
Issues involved:
The judgment involves the following issues: Impugning an order under Section 87(b) of the Finance Act, 1994 read with Section 174(2)(e) of the Central Goods & Services Tax Act, 2017 regarding payment dispute between GAIL and respondent no.2, issuance of a garnishee order by respondent no.1, and the settlement agreement between GAIL and respondent no.2. Impugned Order Dispute: The petitioner, a Central Public Sector Undertaking, challenged an order requiring it to pay a sum claimed by respondent no.1 on behalf of respondent no.2. The petitioner contended that it had not admitted any amount due to respondent no.2 and therefore should not be considered an 'assessee in default' as per the impugned order. Background and Dispute Details: GAIL invited tenders for pipeline works, which were awarded to respondent no.2. Subsequently, GAIL terminated the contract due to alleged submission of fabricated documents by respondent no.2. Respondent no.2 raised a dispute, leading to arbitration proceedings and a temporary order restraining GAIL from encashing bank guarantees. Meanwhile, respondent no.1 initiated proceedings regarding statutory dues owed by respondent no.2. Arbitration Awards and Settlement: Arbitration proceedings between GAIL and respondent no.2 resulted in awards, and the parties reached a settlement. As per the settlement, GAIL agreed to pay a specified amount to respondent no.2 subject to the issuance of an invoice and return of bank guarantees. Court Decision: The Court found that the impugned order was based on the premise that GAIL owed a specific amount to respondent no.2, which was disputed by GAIL. The Court set aside the impugned order, noting that the amount claimed was not established as due and payable. However, GAIL was restrained from making payments to respondent no.2 for a specified period, and respondent no.1 was allowed to take legal steps to secure revenue interests. Conclusion: The judgment concluded by setting aside the impugned order, restricting GAIL from making payments to respondent no.2 temporarily, and allowing respondent no.1 to protect revenue interests within the law.
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