ST - Under statute, no hearing is provided before passing order of extension of provisional attachment u/s 73(C)(2) of FA, 1994 - Petitions dismissed: HC
By TIOL News Service
AHMEDABAD, FEB 10, 2017: ALLEGING that the petitioners are liable to pay Service Tax under the category of 'Franchise Service', SCNs were issued demanding Service Tax of Rs.31,79,00,794/-, Rs.1,58,41,969/-, Rs.71,04,930/- along with interest and penalties as applicable. One of the petitioners had voluntarily deposited Rs.1,61,50,000/- during the investigation.
The Commissioner was of the opinion that with a view to protect the interest of the government dues, properties of the noticees are required to be provisionally attached u/s 73(C) of the FA, 1994 read with Service Tax (Provisional Attachment of Property) Rules, 2008, as it was apprehended that the respective noticees are likely to dispose of the properties hurriedly.
Accordingly, the petitioners were served with the SCNs. After giving fullest opportunity, the Commissioner passed respective orders dated 18/3/2006 of provisional attachment of the properties of the respective petitioners mentioned in the SCNs.
Petitioners have challenged the order of provisional attachment of the properties passed u/s 73(C) of the FA, 1994 and Service Tax (Provisional Attachment of Property) Rules, 2008.
Incidentally, during the pendency of the present petitions, 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 have challenged the respective orders of extension passed by the Chief Commissioner.
It is against these orders that the present Special Civil Applications have been filed.
The petitioners 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 also contended that the impugned orders passed by the Chief Commissioner extending the period of provisional attachment are non-speaking orders as no reasons have been assigned while extending the period of provisional attachment; that before passing the impugned orders of extension extending the period of provisional attachment, no opportunity of being heard has been given to the respective petitioners and, therefore, the same are in breach of and/or in violation of the principles of natural justice.
It is further submitted that against the total payable demand raised against the partnership firm is of Rs.1.51 Crores, whereas the properties of the partners of the partnership firm attached under the impugned orders are worth more than Rs.6 Crores and therefore, the provisional attachment is wholly impermissible.
Reliance is inter alia placed on the decision in Sahara India (Firm), Lucknow Versus Commissioner of Income Tax, Central-I and another = 2008-TIOL-73-SC-IT-LB.
The counsel for the Revenue submitted that fullest opportunity as mandated u/s 73C(1) was given to the respective petitioners by the Commissioner before passing the orders under section 73(C) of the Finance Act, 1994 and that there is no such requirement of giving opportunity of being heard by the Chief Commissioner while passing orders of extension of provisional attachment under sub-section 2 of section 73(C) of the Finance Act, 1994. Inasmuch as the orders passed 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 and, therefore, the petitions need to be dismissed.
The High Court referred to the facts enumerated and observed that under the circumstances, it cannot be said that the orders of provisional attachment passed by the Commissioner are in any way illegal and/or dehor s the provisions of the statute.
Insofar as the challenge to the impugned orders passed by the Chief Commissioner of extending provisional attachment for a further period of one year are concerned, the High Court extracted the provisions of section 73C of FA, 1994 and observed thus -
+ It is required to be noted that section 73C(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 provisional attachment by the Commissioner under section 73(C)(1) of the Finance Act, 1994.
+ 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 before passing the impugned orders of extension of provisional attachment by the Chief Commissioner, no opportunity of being heard were given to the respective petitioners, and therefore, the impugned orders of extension of provisional attachment are not required to be quashed and set aside, has no substance and cannot be accepted, more particularly considering the fact 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.
Noting that the Chief Commissioner has considered at length the records of the case and all the relevant facts, details and statutory provisions while passing the order of extension of provisional attachment, it was held that it could not be said that the orders are non-speaking orders as contended by the petitioners.
Concluding that there was no illegality in the orders passed, the petitions were dismissed.
