TMI Blog2013 (12) TMI 1639X X X X Extracts X X X X X X X X Extracts X X X X ..... er from the petitioner, out of the amount which is due and payable by the petitioner to the service provider and which is held by the petitioner - Therefore, when an amount of more than ₹ 2 crores is due and payable by the petitioner to the service provider, which is held by the petitioner to be paid to the service provider, out of which the petitioner is directed to make payment of ₹ 38,27,023/ towards the Service Tax due and payable by the service provider, it cannot be said that the impugned notice/communication is in anyway without jurisdiction and/or without authority under the law. The impugned demand is absolutely in consonance with Section 87 of the Act. It cannot be said that the impugned demand is illegal and/or arbitrary and/or without jurisdiction and authority under the law - appeal dismissed. - Special Civil Application No. 998 of 2013 - - - Dated:- 11-12-2013 - M.R. Shah and R.P. Dholaria, JJ. Shri Devan Parekh, Sr. Advocate, with Nirav P. Shah, Advocate, for the Petitioners. Shri R.J. Oza, Sr. Advocate, for the Respondent. JUDGMENT [Judgment per : M.R. Shah, J. (Oral)]. - By way of this petition under Article 226 of the Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Tax from the petitioner is ex facie without jurisdiction and clearly beyond the provisions of any law. It is submitted that as such the petitioner has not provided any service but is the recipient of the service. It is submitted that department is seeking to recover from the petitioner Service Tax which is not paid by the service provider. 3.1 It is further submitted by Shri Parikh, learned Counsel appearing on behalf of the petitioner that the service provided by the service provider is covered under the category manpower recruitment and supply agency services and under the aforesaid category, the service provider is required to pay the Service Tax. It is submitted that thus under the Service Tax law, the Service Tax is not payable by the recipient of service under the aforesaid service category. It is submitted that therefore, the impugned demand of Service Tax from the petitioner-recipient of service is wholly without jurisdiction and authority under the law, which deserves to be quashed and set aside. 3.2 When the attention of Shri Parikh, learned Counsel appearing on behalf of the petitioner was drawn to Section 87 of the Finance Act, 1994 [hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent period also substantial amount is paid and for the period in question, part payment is made and therefore, it is to be presumed that the balance amount is disputed. It is submitted that therefore the impugned demand of Service Tax due and payable by the service provider, from the petitioner-recipient of the service is absolutely illegal, most arbitrary and without authority under the law which deserves to be quashed and set aside. 3.4 Shri Devan Parikh, learned Counsel appearing on behalf of the petitioner has further submitted that even otherwise considering the fact that the petitioner is a sick industrial undertaking and is before the BIFR, considering Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 [hereinafter referred to as SICA ], the impugned demand of Service Tax from the petitioner cannot be sustained. In support of his above submissions, Shri Parikh, learned Counsel appearing on behalf of the petitioner has heavily relied upon the decision of the Division Bench of this Court in the case of Core Healthcare Ltd. v. Union of India reported in 2005 (192) E.L.T. 40 (Guj.) as well as the decision of the Andhra Pradesh High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner and the service provider with respect to the amount due and payable to the service provider. It is submitted that except the vague averments by way of amendment in the petition, no concrete material has been produced to show that with respect to the amount of ₹ 2 crores, which is due and payable by the petitioner to the service provider, there is any dispute. It is submitted that only with a view to get out Section 87 of the Act, now the petitioner has tried to make out a case that there is a dispute between the petitioner and service provider with respect to the amount due and payable. 4.1 It is submitted that as such the impugned communication is absolutely in consonance with Section 87 of the Act. It is submitted that considering provision of Section 87 of the Act, it cannot be said that the impugned demand is without jurisdiction and/or authority under the law. 4.2 It is further submitted by Shri Oza, learned Counsel appearing on behalf of the Revenue that as such a case/offence has been booked against the service provider for non-payment of Service Tax and therefore, it cannot be said that as such no steps are taken by the department to recover the Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion came to be amended after attention of learned Counsel for the petitioner was drawn to provision of Section 87 of the Act, it was never the case on behalf of the petitioner that there is any dispute between the petitioner and the service provider with respect to the aforesaid amount due and payable by the petitioner to the service provider. On the contrary in the special civil application it has been specifically pointed out that as and when the bills are raised by the service provider, they are paid. Only with a view to get out of the provision of Section 87 of the Act, subsequently as an afterthought and by way of amendment in the petition, petitioner has come out with a case that there is a dispute with respect to the amount due and payable by the petitioner to the service provider. According to the learned Counsel appearing on behalf of the petitioner, as other amounts have been paid and the balance amount has not been paid, it is to be presumed that there is a dispute with respect to the amount due and payable by the petitioner to the service provider. It is also the case on behalf of the petitioner that when according to the petitioner the amount is disputed, it is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay to the credit of the Central 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 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 authorisatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res is due and payable by the petitioner to the service provider, which is held by the petitioner to be paid to the service provider, out of which the petitioner is directed to make payment of ₹ 38,27,023/ towards the Service Tax due and payable by the service provider, it cannot be said that the impugned notice/communication is in anyway without jurisdiction and/or without authority under the law. The impugned demand is absolutely in consonance with Section 87 of the Act. Considering Section 87 of the Act, such an amount of recovery is permissible. 5.3 Now, so far as the contention on behalf of the petitioner that before making recovery in exercise of powers under Section 87 of the Act, the department has to first try to recover the amount from the service provider and as no steps are taken by the department to recover the amount of Service Tax from the service provider and therefore, the impugned notice deserves to be quashed and set aside is concerned, at the outset it is required to be noted that as such the department has already tried to recover the amount from the service provider [as mentioned in the affidavit in reply] and not only that even an offence has been b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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