ST dues - In lieu of freezing of bank account, Bank guarantee allowed to be furnished
BY a letter dated 04/03/2013 the Dy. Commr. of Service Tax, Mumbai-II wrote to the Branch Manager of United Bank of India, Dahisar (W), Branch, Mumbai to freeze the account of the petitioner on the ground that he had defaulted in payment of Service Tax liability to the tune of Rs.88.10 lakhs although the same had been collected from his clients.
The petitioner has challenged this action under Article 226 of the Constitution of India by filing a WP before the High Court.
It is submitted that the petitioner has already paid the Service Tax of Rs.1,32,50,497/-in two parts (Rs.1,23,68,420/+ Rs.8,82,077/-) and the aforesaid sum includes the amount of Rs.88.10 lakhs referred to in the departmental communication dated 4 March 2013 to the bank.
It is further informed that the respondent department has not commenced any adjudication proceedings and even a show cause notice has not been served upon the petitioner and hence order for freezing of bank account is not justified.
The Counsel for the Revenue informed that the total Service Tax liability of the petitioner is Rs.1,87,34,068/- and, since the petitioner still owes the revenue the balance amount of Rs.54,83,571/- the department is justified.
To this submission, the petitioner submitted that as their business has been completely paralyzed they are ready to give bank guarantee for the said balance amount.
The High Court, therefore, disposed of the petition with a direction to the respondents to withdraw the letter dated 4 March 2013 freezing the petitioner's bank account or any subsequent communication regarding the petitioner's bank account upon the petitioner furnishing the bank guarantee in the sum of Rs.54,83,571/-.
The High Court also added -
+ It will be open to the United Bank of India, Dahisar (W) Branch to utilise the amount lying in the petitioner's account for the purposes of giving the bank guarantee as required by the petitioner.
+ It will be open to the petitioner to give the bank guarantee of United Bank of India or any other Nationalized Bank. The bank guarantee will be subject to the satisfaction of the Commissioner of Service Tax, Mumbai.
+ Since the petitioner is going to furnish the bank guarantee, it will be just and proper for the respondents to issue a show cause notice to the petitioner by 28 February 2014 and to complete the adjudication proceedings as expeditiously as possible and preferably by 30 June 2014.
The petition was accordingly disposed of.