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M/s Vintech Shoppe Pvt. Ltd. Versus Union of India

2017 (2) TMI 577 - GUJARAT HIGH COURT

Recovery of service tax dues - Extension of the period of provisional attachment - extension for a further period of one year - franchise agreement - natural justice - Held that: - section 73(2) of the Finance Act, 1994 permits the Chief Commissioner to extend the period of provisional attachment. Under the statute, no hearing is provided before passing the order of extension of provisional attachment under section 73(C)(2) of the Finance Act, 1994, like while passing original order of provision .....

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that before passing order under section 73(C)(1), fullest opportunity have been given to the respective petitioners and thereafter the orders under section 73(C)(1) have been passed. - It cannot be said that the orders of extension of provisional attachment for a further period of one year, are non-speaking order - petition dismissed - decided against petitioner. - Special Civil Application No. 7727, 7737 of 2016 - Dated:- 25-1-2017 - M. R. Shah And B. N. Karia, JJ. Mr Anandodaya S Mishra, .....

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Finance Act, 1994 and Service Tax (Provisional Attachment of Property) Rules, 2008. During the pendency of the present petitions, subsequently the Chief Commissioner of Central Excise, Customs and Service Tax has extended the period of provisional attachment for a further period of one year, and therefore, the respective petitioners challenged the respective orders of extension passed by the Chief Commissioner. 3.00. Facts leading to the present Special Civil Applications, in nutshell, are as u .....

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thered that M/s. Vintech Shoppe Pvt. Ltd., Surat is a Private Limited Company having Chairman-cum-Managing Director Mr.Jignesh G. Panseria. Further, it was also gathered that M/s. Vintech Shoppe Pvt. Ltd., Surat is not registered with the Service Tax Department for providing taxable services under the category Franchise Service and accordingly, they have not paid any Service Tax to the Government Exchequer in respect of income earned from the franchisee business. 3.02. Accordingly, based on the .....

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from 2010-11 to 2015-16 on accounting of providing representational rights to franchisees appointed by them. 3.03. It was further revealed that such franchisee service provided by them is classifiable under Franchise Service ; however, they failed to pay the applicable Service Tax leviable thereon to the Government Account. 3.04. M/s. Vintech Shoppe Pvt. Ltd. had voluntarily deposited ₹ 1,61,50,000/- till the completion of investigation. 3.05. Accordingly, a Show Cause Notice dated 21/10/2 .....

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terest and penalty applicable thereon. 3.06. A similar Show Cause Notice was also issued on 21/10/2015 to M/s. Vintech Infrastructure, Surat (petitioner of Special Civil Application No. 7737 of 2016) by the Commissioner, Central Excise, Customs and Service Tax, Surat- I, demanding tax amounting to ₹ 1,58,41,969/- (Rupees One Crore Fifty Eight Lacs Forty One Thousand Nine Hundred Sixty Nine only) along with interest and penalty applicable thereon. 3.07. Thus, the following Show Cause Notice .....

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anaging Director, M/.s. Vintech Shoppe Private Limited, Surat. V/ST/15-06/0A/15- 16 dated 21.10.2015 Rs.31,79,00,794/- plus interest and penalty as applicable. 2 M/s. Vintech Infrastructure,421-422, Deepkamal Commercial Hub, Nr. Sarthana Zoon, Varachha Road, Surat. V/ST/15-07/0A/15- 16 dated 21.10.2015 Rs.1,58,41,969/- plus interest and penalty as applicable. 3 M/s. Ramdev Developers, 3rd Floor, Aalay Building, Above IDBI Bank, Parvat Patia, Puna- Khambhari Road, Surat. V/ST/15-08/0A/15- 16 date .....

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ly to dispose of the properties hurriedly, the respective petitioners were served with the Show Cause Notices by the Commissioner, by which the respective petitioners were called upon to show cause as to why the properties mentioned in the Show Cause Notices, of M/s. Vintech Shoppe Pvt. Ltd. and M/s. Vintech Infrastructure, Surat should not be put to provisionally attachment in exercise of the powers under section 73(C) of the Finance Act, 1994 and Service Tax (Provisional Attachment of Property .....

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s, 2008, the respective petitioners have preferred the present Special Civil Applications. 3.11. That during the pendency of the present petitions, the Chief Commissioner passed the respective orders of extension of provisional attachment for a further period of one year. Therefore, by way of amendment, the respective petitioners have also challenged the order passed by the Chief Commissioner, extending the provisional attachment for a further period of one year. 4.00. Mr.Mishra, learned advocat .....

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period of provisional attachment orders passed under section 73(c) of the Finance Act, 1994 has expired. 5.01. Mr. Mishra, learned advocate appearing on behalf of the respective petitioners has vehemently submitted that the impugned orders of extension of provisional attachment passed by the Chief Commissioner are ex-facie illegal, bad in law, non-speaking and in violation of the principles of natural justice. It is submitted that the impugned orders passed by the Chief Commissioner extending t .....

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f the principles of natural justice. 5.03. Mr. Mishra, learned advocate appearing on behalf of the respective petitioners has further submitted that against the total payable demand raised against the partnership firm is of ₹ 1.51 Crores (rounded off), whereas the properties of the partners of the partnership firm and the partners attached under the impugned orders are worth more than ₹ 6 Crores and therefore, the provisional attachment of the properties worth more than ₹ 6 Cro .....

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are vehemently opposed by Ms. Avni Mehta, learned advocate appearing on behalf of the respondent department - revenue. It is submitted that while passing the orders of provisional attachment of the properties, the Commissioner gave fullest opportunity to the respective petitioners. It is submitted that Show Cause Notices were issued by the Commissioner upon the respective petitioners by which the respective petitioners were called upon to show cause as to why the properties mentioned in the show .....

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achment have been passed, the same cannot be said to be erroneous and/or illegal. 6.01. Ms. Avni Mehta, learned advocate appearing on behalf of the respondent department - revenue has further submitted that so far as the challenge to the impugned orders passed by the Chief Commissioner of extension of provisional attachment for a further period of one year on the ground that the same are in breach of the principles of natural justice is concerned, it is submitted that fullest opportunity was giv .....

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ssed by the Chief Commissioner of extension of provisional attachment for a further period of one year, cannot be said to be illegal and/or in breach of principles of natural justice. 6.02. Now, so far as the contention on behalf of the respective petitioners that the orders passed by the Chief Commissioner extending the provisional attachment for a further period of one year are non-speaking orders, is concerned, it is vehemently submitted by Ms. Avni Mehta, learned advocate appearing on behalf .....

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Show Cause Notices have been issued against the respective petitioners demanding total sum of ₹ 34,08,47,693/- plus interest and penalty towards Service Tax, in exercise of powers under proviso to sub-section (1) of section 73 of the Finance Act, 1994. That it was observed that large amount of government dues are pending from the respective petitioners and they are likely to dispose of the properties mentioned in the Show Cause Notices hurriedly and therefore, with a view to protect the in .....

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properties of the respective petitioners. Section 73(C) of the Finance Act, 1994 and the relevant Rules namely Service Tax (Provisional Attachment of Property) Rules, 2008, more particularly Rule 8 provides for provisional attachment of the properties belonging to person / firm against whom notices have been served for demanding Service Tax. Under the circumstances, it cannot be said that the orders of provisional attachment passed by the Commissioner are in any way illegal and/or dehors the pro .....

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94, like while passing original order of provisional attachment by the Commissioner under section 73(C)(1) of the Finance Act, 1994. Section 73(C) of the Act reads as under :- Section 73(C). Provisional attachment to protect revenue in certain cases.- (1) Where, during the pendency of any proceeding under section 73 or section 73A, the Central Excise Officer is of the opinion that for the purpose of protecting the interest of revenue, it is necessary so to do, he may, with the previous approval .....

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t the [Principal Commissioner of Central Excise and Chief Commissioner of Central Excise] may for the reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years]. 7.03. Therefore, whenever the Legislature intended to afford hearing / personal hearing, the same has been provided like section 73(C)(1) of the Act. Under the circumstances, on the ground that .....

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ter the orders under section 73(C)(1) have been passed. 7.04. Now, so far as the submissions on behalf of the respective petitioners that the impugned orders passed by the Chief Commissioner of extension of provisional attachment are non-speaking orders is concerned, on considering the impugned orders passed by the Chief Commissioner, it cannot be said that no reasons at all have been assigned by the Chief Commissioner. From the impugned orders of extension of provisional attachment passed by th .....

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he order of extension of provisional attachment in para 4, the Chief Commissioner observed as under :- I have considered at length the records of the case and all relevant facts, details and statutory provisions. The material available on record demonstrate that investigations resulted in issue of demand and recovery of service tax dues amounting to ₹ 31,79,00,794/- against M/s. Vintech and a total of service tax dues amounting to ₹ 34,08,47,693/- against M/s. Vintech and other assoc .....

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