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TMI Blog2019 (12) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Further, in a case of self-assessment, the quantum of service tax dues along with interest shall be recovered under Section 87 - A conjoint reading of Sections 73 and 87 of the Finance Act, 1994 would go to show that in case of non-payment of service tax dues covered by the situations enumerated, the competent authority is empowered to issue show cause notice within the time frame provided for payment of service tax dues specified in the notice, the period of notice would stand extended in a case of fraud. The petitioner has not disputed the quantum of service tax dues quantified in the garnishee notices. Petitioner has only highlighted the need and necessity to allow it to pay the dues in installments. Therefore, in a case where the assessee admits to the service tax dues as specified in the show cause notice or in the garnishee notice, no adjudication would be necessary. Demand of Interest - HELD THAT:- Section 75 of the Finance Act, 1994, deals with levy of interest on delayed payment of service tax. It provides for payment of simple interest at such rate not below 10 % and not exceeding 36% per annum for the period of delay. It is thus clear that the interest that may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 1994 calling upon respondent No. 1 to pay to the credit of the Central Government the money held by respondent No. 1 in the bank account of petitioner being Bank Account No. 34890601572. 5. Petitioner had represented before respondent No. 2 to withdraw the garnishee notices and to allow the petitioner to operate such bank account. Further prayer was made to allow the petitioner to pay outstanding dues in installments. Respondent No. 2 informed the petitioner on 11.04.2017 that the garnishee notices could not be withdrawn. Regarding payment of dues on installments, it was stated that the matter was under consideration of the Commissioner. 6. Petitioner has stated that despite financial difficulties it had made payment of ₹ 24,00,000.00 on 05.01.2019 towards meeting the liabilities and thereafter a further amount of ₹ 1 lac on 21.01.2019. 7. Notwithstanding the same, respondent No. 2 had instructed the clients of the petitioner not to make payments to the petitioner in view of issuance of garnishee notices. 8. Faced with such a situation, present writ petition has been filed seeking the reliefs as indicated above. 9. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to contend that recovery proceedings dehors adjudication and quantification of service tax dues by the registered service tax provider is not permissible. On the other hand, Mr. Sharma submits that these notices were issued prior to passing of the interim order dated 20.02.2019. After the interim order was passed by this Court, Department has not taken any coercive measures against the petitioner. He further submits that petitioner has huge amount of dues to be paid and despite having credit worthiness, petitioner has not cleared the dues. In such circumstances, question of payment by installment perhaps may not be permissible. Submissions made by learned counsel for the parties have been considered. Related WP(C) No.1123/2019 has been filed assailing garnishee notice issued to the petitioner and further seeking direction to the petitioner s banker, i.e., State Bank of India to remit the money held by it into the account of the Assistant Commissioner or payment by installment. This Court on 20.02.2019 passed the following order:- Petitioner is aggrieved by issuance of garnishee notices by the State Bank of India whereby bank account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , collusion, willful mistatement etc. No such notice was issued to the petitioner within 30 months. Without issuing such show-cause notice under Section 73, impugned garnishee notices could not have been issued under Section 87 (b) of the Finance Act, 1994. Referring to Section 75 of the Finance Act, 1994, learned counsel submits in case of failure to pay tax or any part thereof within the period prescribed, simple interest @ not below10% and not exceeding 36% per annum may be levied. Therefore, though levy of interest in a case covered under Section 73 may be automatic, there is a wide range regarding payment of interest, i.e., between 10% to 36%. Application of mind and adjudication would be required for a particular rate of interest that may be imposed on a defaulting dealer. 12.1. In the instant case, respondent No. 2 had automatically imposed interest at the highest rate which is not justified. Learned counsel for the petitioner has placed reliance on a decision of the Single Bench of the Karnataka High Court in Prasanthi Vs- Union of India; WP(C) No. 14054/2015, decided on 29.04.2015 and contends that garnishee notices, not to speak of imposition of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner. Therefore, the facility of payment of arrear dues in installments may not be extended to the petitioner. He, therefore, submits that the writ petition is devoid of merit and is liable to be dismissed. 14. In her reply submissions, Ms Hawelia, learned counsel for the petitioner submits that petitioner is at present paying GST at the rate of ₹ 22 to 25 lacs per month and, therefore, if the entire amount of service tax dues is required to be paid at one go, petitioner may not be able to pay the same. On a query by the Court learned counsel for the petitioner submits that petitioner is in a position to pay installment of ₹ 6 lacs per month till the arrear service tax dues are cleared. Regarding the interest portion, she submits that the rate of interest has to be adjudicated upon before the same is imposed on the assessee. Therefore, the interest part be remanded back to respondent No. 2. 15. Submissions made by learned counsel for the parties have been considered. Also perused the materials on record. 16. Since learned counsel for the petitioner has placed reliance on the decision of the Karnataka High Court in Prashanthi (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted. Explanation .- Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years, as the case may be. (1A) Where any service tax has not been levied or paid or has been short-levied or short paid or erroneously refunded, by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of this Chapter or the rules made thereunder, with intent to evade payment of service tax, by such person or his agent, to whom a notice is served under the proviso to Sub-Section (1) by the Central Excise Officer, such person or gent may pay service tax in full or in part as may be accepted by him, and the interest payable thereon under Section 75 and penalty equal to twenty-five per cent of the service tax specified in the notice or the service tax so accepted by such person within 30 days of the receipt of the notice. (2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. (5) The provisions of sub-section (3) shall not apply to any case where the service tax had become payable or ought to have been paid before the 14th day of May, 2003. (6) For the purposes of this section, relevant date means, - (i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid - (a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; (b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the 31 money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount; (ii) every person to whom a notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary; (iii) in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and all the consequences of this Chapter shall follow; (c) the Central Excise Officer may, on an authorisation by the Principal Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, decision of the Karnataka High Court in Prashanthi (supra), is distinguishable on facts. 23. Before dealing with the prayer of the petitioner for payment of service tax dues in installments, it would be apposite to first deal with the question of interest. As already noticed above, Section 75 of the Finance Act, 1994, deals with levy of interest on delayed payment of service tax. It provides for payment of simple interest at such rate not below 10 % and not exceeding 36% per annum for the period of delay. It is thus clear that the interest that may be imposed in case of delayed payment of service tax is not a fixed percentage but ranges between 10% to 36% indicating an element of flexibility. What would be the interest in a particular case would depend upon the facts and circumstances of that case for which discretion is vested on the competent officer. Such discretion perforce has to be exercised in a fair and judicious manner and cannot be exercised mechanically to levy the maximum rate of interest. In the instant case, what is seen is that respondent No. 2 has imposed the maximum percentage of interest i.e., 36 % without any exercise of discretion which indicates no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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