Service Tax - Provisional Attachment of Property -Commissioner and Deputy Warned and Cost Imposed by High Court
AS per the Service Tax (Provisional Attachment of Property) Rules, 2008, a notice has to be issued by the Commissioner before provisional attachment of property and in the first instance immovable property is required to be provisionally attached and, in absence of immovable property, attachment of movable property could be done.
As per Board Circular No :
1. the provision for attaching a property provisionally is of an extraordinary nature and should be resorted to in the utmost circumspection and with maximum care and caution.
2. The authorities should have a reasonable belief that the assessee may dispose of, or remove the property which would not be in the interest of the revenue and, therefore, a firm opinion should be formed that the interest of the revenue is required to be protected.
3. Once an opinion is formed, the proposal should forward it within one month of the issuance of the show cause notice but where proceedings under Section 73 or 73 (A) of the Act has already been initiated, only the Commissioner would have the power to attach the property.
4. if the power is frivolously exercised and attachment is made without any cogent reasons then appropriate disciplinary proceeding may be initiated against the officers.
But these are cumbersome legal inanities up with which many of our Commissioners cannot put and so a bright Commissioner and his deputy sprung into action and attached property without notice. A Show Cause Notice was issued on 20th October 2015 and even before the assessee could get it on 21st October, the bank accounts of the assessee were attached on 20th October itself.
The High Court found that; the bank accounts were attached in gross violation of Rule 3 of the Rules of 2008; the proposal submitted by the Deputy Commissioner, clearly indicated that first the property should be attached and thereafter notice should be issued. This proposal was approved by the Commissioner without any application of mind and without considering the provision of the Rules and the circular.
The High Court issued Notice to the Commissioner and Deputy to show cause as to why disciplinary proceeding should not be instituted against them in terms of paragraph 2 (iii) of the Circular. The High Court issued a warning to the Commissioner and Deputy Commissioner, apart from imposing a cost of Rs. 25,000. Who will pay this cost?
Board directed to issue Circular.:
The Court directed a copy of the order to be sent to CBEC with specific instruction to issue a circular to all the officers ensuring that the powers under Rule 3 should be exercised with utmost care and caution and should not be exercised frivolously.
We bring you this order today. Please see Breaking News.