2024 (3) TMI 1022 - HC - Service Tax

Recovery of service tax - Validity of instruction issued by the department to the Bank - Restriction from permitting any withdrawal from the accounts held by the appellant until the service tax liability is fully satisfied - Post GST era - HELD THAT - Ext. P6 order has been passed after complying with all the statutory formalities and giving sufficient opportunity to the appellant for hearing. It cannot be said that Ext. P6 was passed without jurisdiction or without complying with the principles of natural justice. Without challenging Ext. P6 in appeal, the appellant cannot challenge the same in the writ petition. Hence, the challenge against Exts. P6 and P8 must fail. Appellant submitted that the appellant may be granted instalment facility to clear off the liability, and he may be permitted to operate the bank account on payment of the first instalment. The learned standing counsel for the respondents submitted that the Commissioner has the power to grant a maximum of 24 instalments. Considering the facts and circumstances of the case and the present financial condition of the appellant, the appellant can be permitted to clear off the service tax liability by way of instalments - appellant shall make a payment of Rs. 25,00,000/- towards the service tax liability on or before 31st January, 2024 - Appeal disposed off.

Summary

Issues:
The issues involved in the judgment are the imposition of service tax, interest, and penalties on the appellant without challenging the order in appeal, the enforcement of the order through a notice to the appellant's bank, and the request for installment facility to clear off the liability.

Imposition of Service Tax, Interest, and Penalties:
The appellant, a businessman, received a notice regarding non-payment of service tax based on information from the Income Tax Department. Despite several communications and opportunities for a personal hearing, the appellant did not challenge the order imposing a substantial amount towards service tax, interest, and penalties. The High Court held that since the appellant did not challenge the order in appeal, he cannot challenge it in a writ petition. Therefore, the challenge against the order and the subsequent notice to the bank was dismissed.

Enforcement of Order through Bank Notice:
Following the order upholding the charges, a notice was issued to the appellant's bank to freeze the accounts until the service tax liability is satisfied. The appellant challenged this notice through a writ petition. However, the High Court ruled that since the original order imposing the liability was not appealed, the appellant cannot challenge the enforcement notice separately. Therefore, the challenge against the bank notice was also dismissed.

Request for Installment Facility:
During the hearing, the appellant requested an installment facility to clear off the service tax liability. The appellant proposed a payment of a certain amount by a specified date and subsequent monthly installments. The High Court considered the appellant's financial condition and granted permission for the appellant to clear the liability through installments. The court ordered the appellant to make an initial payment by a certain date, followed by monthly installments over 24 months. It was specified that failure to make payments would allow the respondents to proceed against the appellant to recover the entire due amount.

In conclusion, the High Court disposed of the writ appeal by allowing the appellant to clear the service tax liability through installments, lifting the bank account freeze upon an initial payment, and setting conditions for future payments to avoid default.