2013 (12) TMI 500 - HC - Service Tax

Demand of service tax - Bank accounts freezed - Held that - petition dispose of with a direction to the respondents to withdraw the letter dated 4 March 2013 freezing the petitioner s bank account or any subsequent communication regarding the petitioner s bank account upon the petitioner furnishing the bank guarantee - It will be open to the United Bank of India, Dahisar (W) Branch to utilise the amount lying in the petitioner s account for the purposes of giving the bank guarantee as required by the petitioner - It will be open to the petitioner to give the bank guarantee of United Bank of India or any other Nationalized Bank. The bank guarantee will be subject to the satisfaction of the Commissioner of Service Tax, Mumbai - Decided in favour of assessee.

Summary

Issues:
Challenging freezing of bank accounts due to alleged Service Tax default.

Analysis:
The petitioner challenged the freezing of their bank accounts by the respondents, alleging that they had already paid the Service Tax liability. The action was taken based on a letter indicating a default of Rs.88.10 lakhs in payment. The petitioner claimed to have paid Rs.1,32,50,497 in two parts, which included the disputed amount. The petitioner argued that no adjudication proceedings had commenced, and no show cause notice had been served. On the other hand, the revenue's counsel contended that the total liability was Rs.1,87,34,068, leaving a balance of Rs.54,83,571 unpaid. The petitioner offered to provide a bank guarantee for the outstanding amount to unfreeze the account, as their business had been severely affected. The court directed the respondents to withdraw the freezing letter upon the petitioner furnishing a bank guarantee for the balance amount. The petitioner was allowed to choose the bank for the guarantee, subject to the satisfaction of the Commissioner of Service Tax, Mumbai. The court instructed the respondents to issue a show cause notice by a specified date and complete adjudication proceedings promptly.

This judgment dealt with the challenge against the freezing of bank accounts over alleged Service Tax default. The court considered the petitioner's claim of having paid a significant portion of the tax liability, including the disputed amount. The revenue's argument regarding the outstanding balance was also acknowledged. The court balanced the interests by allowing the petitioner to provide a bank guarantee for the remaining sum to unfreeze the account, considering the adverse impact on the petitioner's business operations. The directive to withdraw the freezing letter upon furnishing the bank guarantee aimed to provide relief to the petitioner while ensuring the revenue's interests were protected. The court's decision emphasized procedural fairness by instructing the issuance of a show cause notice and timely completion of adjudication proceedings, promoting a just resolution of the dispute.