2016 (9) TMI 1026 - HC - Service Tax

Validity of attachment orders - recovery of service tax dues - dispute is whether the petitioners have cleared the entire sum of ₹ 3,41,82,926/or anything is balance. - Held that - we do not approve of the conduct of the respondents in the peculiar facts of continuing with the attachment, though the petitioners have paid substantial sums by a voluntary disclosure of the dues and secondly, under protest. The Judgments of this Court, time and again, lay down the principle that if dues are disputed and the claims of the Revenue are not admitted, its remedy lies elsewhere. It cannot by a coercive process or coercive means force the assessees to part with monies which the assessees state are not due and payable. Here the assessees have stated on oath before this Court that no amount as is now sought to be claimed is due and payable. It is not as if the Revenue is remediless in as much as it can take the route of adjudication by issuing a show cause notice, giving a party like the petitioners opportunity to place its version and thereafter pass an order assigning reasons. That order, for its legality and validity, can always be tested by a higher forum. Therefore, the impugned attachment is quashed and set aside. - Writ petition allowed

Summary

Issues:
1. Refusal to grant adjournment for respondents to check accuracy of statements post Attachment Order.
2. Dispute regarding payment of service tax dues by petitioners.
3. Allegation of continuing attachment despite substantial payments made by petitioners.
4. Principle that Revenue cannot coerce payment of disputed dues without due process.

Analysis:
1. The High Court refused to grant an adjournment to the respondents, who sought time to verify the accuracy of statements made post the Attachment Order. The Court noted the request for adjournment and the specific details mentioned in the letter dated 1972016.

2. The petitioners were aggrieved by an Attachment Order directing attachment of properties due to alleged service tax dues. The petitioners claimed to have already paid a substantial amount towards the dues, including voluntary disclosures made under a scheme. The dispute centered around whether the entire sum had been cleared by the petitioners.

3. The Court criticized the respondents for continuing with the attachment despite the petitioners' payments made voluntarily and under protest. The Court disapproved of the coercive approach taken by the Revenue, especially when the dues were disputed by the assessees.

4. The judgment emphasized the principle that if dues are disputed, the Revenue must follow due process and cannot force payment through coercive means. The Court highlighted that the Revenue has other legal remedies available, such as issuing show cause notices and allowing the assessees to present their version before passing an order.

5. In conclusion, the Court allowed the writ petition, quashed the impugned attachment, and set aside ongoing attachments related to bank accounts. The judgment reiterated the importance of following legal procedures and respecting the rights of assessees in cases of disputed dues.