2014 (3) TMI 656 - HC - Service Tax

Bail application under offence punishable under Section 89 read with Section 90 of the Finance Act, 1994 - non payment of Service Tax - Held that - scheduled payment offer made by the assessee was not acceptable by the revenue - it is a continuing offence and as on 10.5.2013 there were huge outstandings definitely beyond the amount of Rs.50 Lakhs and more so said amount was outstanding even at the time of arrest of the applicant, it is not a case in which the applicant can be released on bail more so when the investigation is still going on - Decided against appellant.

Summary

Issues:
1. Bail application for offence under Section 89 read with Section 90 of the Finance Act, 1994.

Analysis:
The judgment deals with a bail application for an offence under Section 89 read with Section 90 of the Finance Act, 1994. The applicant, a Director of two companies, was arrested for non-payment of Service Tax for the period from 2010 to December 2013. The applicant had collected a substantial amount of Service Tax but failed to deposit most of it, utilizing government funds for personal use. The applicant argued that the amended provisions of the Finance Act, 1994, made the offence cognizable and increased the punishment to seven years for non-payment of collected Service Tax exceeding Rs.50 lakhs.

The applicant contended that the arrest was not valid as the amount collected during the relevant period did not exceed Rs.50 lakhs. However, the respondent argued that the applicant had collected a significant sum as Service Tax but only deposited a small portion, admitting the liability in the balance sheet. The respondent highlighted that the applicant was well aware of the Service Tax laws and had knowingly evaded payment. The respondent emphasized that the investigation was ongoing to determine the exact amount evaded.

The respondent further argued that the non-deposit of Service Tax was a continuing offence, making the entire outstanding amount liable to be deposited with the Central Government. Concerns were raised about the applicant's potential to tamper with official records if released on bail. The respondent cited a precedent where bail was granted in a similar case by the Calcutta High Court, emphasizing the need to consider the entire outstanding amount due for deposit.

The court, considering it a continuing offence and the substantial outstanding amount, denied the bail application. The court noted that the applicant's offer to deposit the outstanding Service Tax in a time-bound manner was not acceptable, given the gravity of the offence and the ongoing investigation. The bail application was dismissed, and the applicant was not released on bail due to the significant outstanding amount and the continuing nature of the offence.