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2021 (5) TMI 462 - HC - Service TaxDefaulter under the SVLDRS scheme or not - failure to pay the amount mentioned in SVLDRS-3 in time - Seeking adjustment of refund under Income Tax with amount payable under SVLDRS - modification of garnishee notice based on Form No.SVLDRS-3 issued by 2nd respondent - seeking restraint on respondent nos.1 and 2 from taking any coercive or punitive actions against petitioner-Company’s officials and directors - HELD THAT:- The 3rd respondent is a creature of the Income Tax Act, 1961 and is obliged to discharge his functions strictly in accordance with the provisions of the Income Tax Act, 1961; and he is not entitled to act in violation of the said provisions of the said Act by allowing a set off of Income tax refund due to the petitioner against Service tax dues of the petitioner under the Finance Act, 1994 - Merely because the Principal Chief Commissioner of Income Tax, Hyderabad vide letter dt.20.11.2020 accorded approval for adjusting income tax refund against dues to the Service Tax Department, the action of the 3rd respondent, which is per se illegal and in violation of Section 245 of the Income Tax Act, 1961, does not get validated. It would be a travesty of justice to allow the plan of respondent No.s 1 to 3 to somehow or other ensure that petitioner gets the tag of a ‘defaulter’ in payment of Service Tax dues, to succeed. The petitioner shall be deemed to have made payment of ₹ 18,91,37,548/- determined under Form No.SVLDRS-3 dt.28.01.2020 before 30.06.2020; the respondents are restrained from declaring that the petitioner had committed a default under the SVLDRS Scheme 2019 and also restrained from taking any coercive action against the Directors, officials of the petitioner or against the petitioner; the respondents 1 and 2 are directed to release to the petitioner the amount of ₹ 12,01,23,118/- out of the Income Tax refund amount of ₹ 30,92,60,666/- payable to it within four (4) weeks; the 3rd respondent shall pay petitioner interest on the sum of ₹ 30,92,60,666/- from 21.5.2020 ( the date of expiry of the 3 month period as per Section 243 (1) (b) of the Income Tax Act,1961) till 24.11.2020 at 15% per annum within four (4) weeks; the respondents 1 and 2 shall also pay petitioner interest at 15% per annum on ₹ 12,01,23,118 ₹ 30,92,60,666/- less ₹ 18,91,37,548/- = ₹ 12,01,23,118/- from 25.11.2020 till date of payment within four (4) weeks; costs of ₹ 10,000/- shall also be paid by respondent no.1 and respondent no.3 to the petitioner within four (4) weeks.
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