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M/s Quality Fabricators And Erectors Versus The Deputy Director, Dgcei Zonal Unit Mumbai And Others

2015 (12) TMI 494 - BOMBAY HIGH COURT

Recovery of service tax - Section 87 - freezing of bank accounts - adjudication of show cause notice is pending - Held that:- taxes as assessed which are presently payable by the notified person are taxes which have been taken into account. It is in that context and carrying this principle further that the Division Bench of this Court applied it to recovery under Section 87 of the Finance Act, 1994. The reliance placed on the judgment of ICICI Bank(2015 (5) TMI 300 - BOMBAY HIGH COURT) is thus, .....

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ion, amount was paid.

Thus, the settled principle that levy, assessment and valuation alone will enable the Revenue to recover the amount of taxes and recovery cannot precede prior important steps. Merely because there is incidence and charge of tax will not be of assistance as the charging section and machinery provisions all enable together, the Revenue to assess the tax. Unless and until in case before us there is a crystallization of a demand by proper adjudication order and on h .....

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to be ascertained then, we do not find any substance in the contentions raised before us on behalf of the Revenue. The Division Bench in paragraph 45 also relied upon the order passed in the case of Lawson Tours and Travels(2015 (7) TMI 347 - BOMBAY HIGH COURT). We, therefore, do not find any reason to sustain the impugned action. - Decided in favour of asssessee. - Writ Petition No. 10250 of 2015 - Dated:- 17-11-2015 - S C Dharmadhikari And B P Colawalla, JJ. For the Appellant : Mr. Prakash Sh .....

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operate the bank accounts. These bank accounts have been frozened pursuant to the communications from the Directorate General of Central Excise Intelligence, Mumbai Zonal Unit. 3. The Petitioner before us is a sole Proprietor carrying on business in the name and style mentioned in the cause title. Respondent Nos. 1 and 2 are the Deputy Director and Additional Director General in the Directorate General, Central Excise Intelligence. These are officers invested with powers of investigation under .....

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to the Petitioner, it owes substantial sum of money. 4. The Petitioner is carrying on business of fabrication and erection of plants, structures etc. The Petitioner undertakes the projects on turn key basis as well as on work contract basis. The Petitioner has been registered as an assessee with the Service Tax Department since 2008. The Petitioner claims that he has been filing periodical returns under the applicable law. 5. The Directorate General of Central Excise Intelligence searched the o .....

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d the amount of service tax recovered from him. 6. A reply was given to this show cause notice on 17th July, 2015 denying all the allegations and asserting that the service tax due and payable in law has been paid. The Petitioner requested for a personal hearing. 7. The Additional Director, however, has not placed the matter for a personal hearing nor has he passed any order on the show cause notice. However, the allegation in the Petition and throughout is that instead of any adjudication in re .....

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; 98,18,512/. The Petitioner, therefore, has moved this Court alleging that the show cause notice ought to have been taken to its logical end and conclusion. Before any adjudication order has been passed and in terms of this show cause notice and a personal hearing, there is no question of any recovery and by addressing such communications to the bank. In these circumstances, the writ jurisdiction of this Court is invoked. 8. Reliance has been placed on the language of Section 87 of the Finance .....

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so also crystallization of the dues. It is only upon such an exercise that the modes can be resorted to. In the present case, a direct recovery action is therefore not in accordance with law. Mr Shah places reliance upon the following judgments and orders including of this Court: - (a) Harshad Shantilal Mehta v/s Custodian and Others (1998) 5 SCC 1. (b) Lawson Tours and Travels (India) Pvt Ltd v/s Deputy Director, DGCEI, Zonal Unit, Mumbai (2015 (317) E.L.T 248 (Bom) (c) ICICI Bank Ltd v/s Unio .....

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he dues which are admitted, remain unpaid. He would invite our attention to page 56 of the paper book wherein the Directorate General of Central Excise Intelligence in a communication dated 30th October, 2014 addressed to the Federal Bank states that investigations conducted reveal that the Petitioner service provider has provided the services of work contract. In addition to the consideration towards services the amount of service tax has been charged and duly recovered. If the service recipien .....

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e Petition and its Annexures. 12. It is common ground that AnnexureA is a copy of the show cause notice dated 15th October, 2014. It is addressed to the very Petitioner before us. It refers to the collection of service tax allegedly by the Petitioner and it is not remittance to the Government. This was revealed during the search carried out. This was also revealed from the documents which have been seized under a panchanama. These documents refer to some invoices for the period 2009-2010 to June .....

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he service tax invoices are referred with a specific allegation that these would indicate how the service tax has been recovered but intentionally not deposited in the Government treasury. Then, reference to the payment made in part and how the service tax is leviable in terms of the legal provisions, has been set out. Thus, the demand is based on the allegation that there is a contravention of the legal provision. Admittedly, in this show cause notice, there is reference to several invoices whi .....

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ice and which was duly served, the Petitioner had filed the reply. It may be that the reply is filed in the month of July 2015 and after the requisite action under Section 87 of the Finance Act but the fact remains that the Petitioner has denied the allegations and refuted the demand. It is in these peculiar circumstances that we are of the opinion that there was no occasion for the authority to have issued the notices under Section 87 to the banks and to the Petitioner's debtor straightaway .....

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thing which is payable and recoverable. The Hon'ble Supreme Court held that it does not refer merely to a liability created by the charging sections to pay the tax under the relevant law. It refers to an ascertained liability for payment of tax quantified in accordance with law. In other words, the taxes as assessed which are presently payable by the notified person are taxes which have been taken into account. It is in that context and carrying this principle further that the Division Bench .....

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e payments have been made under protest. There was denial of liability to pay service tax but under duress and coercion, amount was paid. That is how the Petitioner in that case sought guidance from the Central Board of Directorate. A communication dated 25th March, 2015 called upon the Petitioner in that case to make payment of interest for allegedly delaying payment of service tax. The argument of the Petitioner's senior counsel has been noted in paragraphs 6 and 7 of the judgment and it w .....

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x will not be of assistance as the charging section and machinery provisions all enable together, the Revenue to assess the tax. Unless and until in case before us there is a crystallization of a demand by proper adjudication order and on hearing the Petitioner, there was no question of any recovery. Even if the letters have been addressed to the bank and there has been a freezing of the account, yet, we find that till date there is no adjudication order passed. The show cause notice has been is .....

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