2023 (12) TMI 1401 - HC - GST

Challenge to action of the respondents in realising the service tax arrears under the Finance Act 1994 in terms of Section 87(b) by issuing a garnishee order - HELD THAT - The 5th respondent had already withdrawn an amount of 1, 30, 64, 178/- from the bank account of the appellant held with the said bank and paid to the 2nd respondent. The balance outstanding under the garnshiee order is 68, 01, 439/-. The learned standing counsel for the appellant submitted that the appellant does not have enough funds with them and they cannot mobilise the balance amount in five instalments as directed. The learned standing counsel for respondents 1 to 3 formally objected to the grant of more instalments albeit conceding that Ext.P4 circular allowed for the grant of more instalments. Considering the rival submissions the appellant can be granted twelve instalments as against five instalments granted by the learned Single Judge to discharge the outstanding service tax and interest. The first instalment of 15, 00, 000/- can be deducted by the 4th respondent from the amount lying in the appellant s bank account as directed by the learned Single Judge. The appellant shall pay the balance amount in twelve equal instalments starting from 1st February 2024. Appeal disposed off.

Summary

In the case before the Kerala High Court, the appellant, Pathanamthitta Municipality, challenged the respondents' action of recovering service tax arrears under the Finance Act, 1994, through a garnishee order. The appellant did not contest the tax liability or amount but requested instalment facilities to settle the arrears according to Ext.P4 circular, which allows up to 36 instalments.

Initially, the Single Judge granted the appellant five instalments to clear the arrears, permitting the 4th respondent to deduct Rs. 15,00,000 from the appellant's bank account, with the remainder to be paid in five equal instalments. The appellant appealed, arguing that they lacked sufficient funds to comply with this order.

The court, after considering submissions from both parties, acknowledged the provision in Ext.P4 for more instalments and decided to extend the instalment period. It modified the Single Judge's decision, allowing the appellant to discharge the outstanding service tax and interest in twelve instalments instead of five. The first instalment of Rs. 15,00,000 would still be deducted by the 4th respondent, with the remaining balance payable in twelve equal instalments starting from February 1, 2024. The writ appeal was disposed of accordingly.