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A welcome Judgement -Attachment of bank accounts lifted provided monies are utilised entirely for petitioner’s catering business and not diverted to any personal account: High Court
THE petitioner seeks quashing and setting aside of the communication dated 17th May, 2018 and the consequential recovery notices issued u/s 87 of the Finance Act, 1994 to the bank and debtors, including two notices dated 22nd June, 2018 issued by the second respondent and one notice dated 4th January, 2019 issued by the third respondent.
The case of the petitioner is that they are providing services of catering and housekeeping to offshore oil and gas industry on mobile installations. It is claimed that the petitioner was paying taxes regularly, but on account of some recession in the industry from the year 2011-12, the petitioner faced financial difficulties; that the customers did not make timely payments and that is why tax was not paid.
On 13th April, 2018, the department pointed out that the outstanding amount of service tax is Rs.1,86,63,841.78.
Thereafter, the department issued notices of recovery invoking section 87 of the Finance Act, 1994 to the Branch Manager of Bassein Catholic Cooperative Bank Ltd., Bandra Branch and Branch Manager of Indusland Bank Ltd., Andheri Branch directing them to make payment of Rs.2.51 crores along with estimated interest thereon of Rs.4.47 crores till 31st May, 2018 amounting to Rs.6.98 crores.
Later, the department proceeded to freeze the bank accounts.
The petitioner’s request is to de-freeze or to release the bank accounts from attachment.
The High Court considered the extensive submissions and observed thus –
The petitioner, in one of its communications has stated that it does not carry out any activities in India and, therefore, the provisions of the Finance Act, 1994 do not apply. The petitioner, therefore, disputes its liability to pay service tax and interest.
To our mind, this issue, though raised by the petitioner at a belated stage, requires a consideration at the hands of the respondents. The petitioner has been consistently maintaining that their bank accounts need not be frozen.
To our mind, therefore, instead of this court going into these disputed issues, in facts peculiar to this case and without this order being treated as a precedent for the future cases, the respondents should provide an opportunity to the petitioner so as to make good its case and particularly the stand in the writ petition.
Finally, we find that the petitioner has specifically stated that section 87 cannot be resorted to unless the determination of the disputed issues takes place. Merely because there is a self assessment done does not mean that the petitioner can be saddled with such recovery notices.
Viewing that (in view of the undertaking given) the petitioner should be given an additional opportunity to make good its case, the petitioner was directed to appear for a personal hearing before the Commissioner, CGST, Mumbai West Commissionerate, Mumbai, and who was required to pass a reasoned order expeditiously, and in any event, by 10th March, 2019.
The two bank accounts, one with Bassein Catholic Co-operative Bank Ltd., Bandra Branch and another with Indusland Bank Ltd., Andheri Branch were ordered to be released from attachment.
The writ petition was disposed of.