2023 (11) TMI 1133 - HC - Service Tax

Recovery of confirmed demand - Freezing the bank account of the petitioner - petitioner neither filed an appeal nor paid the tax and penalty - non-registration under Finance Act - HELD THAT - The petitioner neither filed an appeal nor paid the tax and penalty as determined, and therefore, notice under Section 87(b) of Chapter V of the Finance Act 1994 came to be issued for freezing the bank account of the petitioner. It was also said that the total amount outstanding was Rs. 1,05,73,062/- - petitioner neither made use of the statutory remedy of appeal within the time prescribed as per Section 85(3A) of the Finance Act 1994 nor did he reply to the notice issued in Ext .P7 and after the expiry of the maximum period of appeal of three months, the petitioner approached this Court by filing this writ petition. This Court does not exercise the appellate jurisdiction against the Order-in-Original. It also cannot be said that the Order-in-Original is without jurisdiction or that there has been a violation of the principle of natural justice. Considering the fact that the petitioner failed to exercise the right of appeal within the limitation period prescribed under the Statute, this Court is not in a position to extend the limitation period for filing the appeal - Since the order does not appear to be without jurisdiction, nor has there been a violation of Article 14 of the Constitution of India inasmuch as the petitioner was issued show cause notice, he filed a reply, and he was also granted an opportunity of hearing, there are no ground to interfere with the impugned order and notice in Exts. P6 and P8. Petition dismissed.

Summary

Issues involved:
The judgment involves issues related to service tax liability on services provided by the petitioner, failure to register under the Finance Act, demand and recovery of service tax, penalty imposition, failure to pay the determined tax and penalty, freezing of bank account, and the petitioner's failure to utilize the statutory remedy of appeal within the prescribed time.

Service Tax Liability:
The petitioner, engaged in providing services like right to admission to a private spice garden and joy rides, was found to have not registered under the provisions of the Finance Act regarding service tax. The petitioner failed to file returns under the service tax provisions despite declaring a significant amount as income in the Income Tax Returns. The authorities demanded service tax, along with penalties, for the services rendered by the petitioner.

Show Cause Notice and Reply:
The petitioner was issued a show cause notice to explain why the services provided should not be classified as taxable under specific sections of the Finance Act. In response, the petitioner argued that the income was disclosed in the Income Tax Returns and taxes were paid accordingly. The petitioner also highlighted that similar activities by others were not subjected to service tax.

Order and Penalties Imposed:
After considering the petitioner's reply, the authorities confirmed the demand for service tax, along with additional cess amounts, and imposed penalties under the relevant sections of the Finance Act. The order specified the tax amount, penalties, and provided an option for reduced penalty if paid within a specified period.

Failure to Pay Tax and Penalty:
The petitioner did not comply with the order to pay the determined service tax and penalties. Subsequent notices were issued, requesting payment or submission of appeal details. The petitioner neither appealed nor paid the outstanding amounts, leading to a notice for freezing the bank account due to the total outstanding sum.

Court's Decision:
The petitioner approached the court through a writ petition after failing to utilize the statutory remedy of appeal within the prescribed time. The court noted that it does not hold appellate jurisdiction against the Order-in-Original and found no grounds to interfere with the impugned orders and notices. The court dismissed the writ petition, stating that there was no jurisdictional violation or breach of natural justice.