No tax can be collected from assessee without a proper assessment order being passed.

PJ/Case Law/2013-14/2011

Case:-CHITRA BUILDERS P. LTD. VERSUS ADDL. COMMR. OF C., C.E. & S.T., COIMBATORE

Citation:-2013(31) S.T.R. 515 (Mad.)

Brief Facts:-This writ petition has been filed praying that this Court may be pleased to issue a writ of Mandamus directing the respondents to return to the petitioner, a sum of Rs. 2 crores, collected by the respondent-Department, under coercion, during the search conducted by it at the branch office of the petitioner-company, located at 119, Amaravathy Second Street, Gurusamy Nagar, Bharathar University Post, Coimbatore, on 1-3-2012.

It has been stated that the petitioner is registered with the Central Excise Service Department, Kolkata, for the payment of Service Tax, relating to the works undertaken by it, within the jurisdiction of Kolkata Commissionerate, under Chapter V of the Finance Act, 1994, read with the Service Tax Rules, 1994. As such, the petitioner has been paying the Service Tax due from it, regularly, without any default.

It has also been stated that the petitioner is also registered with the Central Excise and Service Tax Department, Rayagada, for the payment of Service Tax, in respect of the woks undertaken by it, within the jurisdiction of the Rayagada Commissionerate.

Appellant Contentions:-It has also been stated that there is no liability on the part of the petitioner to pay Service Tax. While so, the collection of a sum of Rs. 2 crores, by the respondent-Department, from the petitioner, is arbitrary and illegal. Therefore, the petitioner has filed the present writ petition, before this Court, praying that this Court may be pleased to direct the respondents to return a sum of Rs. 2 crores, collected by them, from the petitioner, during the search conducted, on 1-3-2012.

It has also been stated that the registered office of the petitioner is located at the Centre Point Building, 21, Hemant Basu Sarani, 4th floor, Room No. 405, Kolkata, West Bengal. During the regular course of its business, the petitioner has executed certain works in the nature of excavation and sites clearance, for M/s. Larsen & Toubro Limited, as the main contractors for the various infrastructural works, which had been entrusted to it. None of the works had been carried out by the petitioner, within the jurisdiction of the Coimbatore Commissionerate. However, a search warrant had been issued by the Additional Commissioner of the Customs, Central Excise and Service Tax, Coimbatore, the first respondent herein for the search conducted, on 1-3-2012, at 119, Amaravathy Second Street, Gurusamy Nagar, Bharathiar University Post, Coimbatore. On the same date, a search had been conducted at the residence of the Director of the petitioner-company. When the search had been conducted, a deposition had been recorded, from Rakhi Shah, one of the directors of the petitioner-company. The said deposition had been recorded, under coercion. It is recorded as though a sum of Rs. 2 crores was being paid to the respondent-Department, voluntarily, as part of the arrears of Service Tax, due from the company. It is a well settled position in law that no tax can be collected from the assessee without a proper assessment order being passed, in accordance with the procedures established by law.

It has been further stated that the respondent has no jurisdiction to search the premises of the petitioner-company, or of its Directors, as the petitioner is not carrying on its business within the jurisdiction of the respondent. Further, the petitioner has not been registered under the respondent-Department, at Coimbatore.

Respondent Contentions:-A counter affidavit has been filed on behalf of the respondents denying the averments and allegations made by the petitioner in the affidavit filed in support of the writ petition. In the counter affidavit filed on behalf of the respondents, it has been stated, inter alia, that the petitioner, having collected a huge amount of Rs. 17 crores, as Service Tax, by raising tax invoice, and by enabling the service recipient, namely, M/s. Larsen & Toubro Limited, to avail the input service credit, does not have the locus standi to claim for the return of the sum of Rs. 2 crores, paid by the petitioner-company, voluntarily, during the search conducted, on 1-3-2012, to be adjusted against its Service Tax liability. The said amount had been paid by the petitioner to mitigate the offence committed by it under Section 73(3) of the Finance Act, 1994. While so, it is not proper on the part of the petitioner to pray that this Court may be pleased to direct the respondents to return the sum of Rs. 2 crores, paid on behalf of the petitioner-company, voluntarily, in respect of its Service Tax liability. Therefore, the present writ petition, filed by the petitioner, is devoid of merits and therefore, it is liable to be dismissed.

Reasoning of Judgment:-In view of the averments made on behalf of the petitioner, as well the respondents, and in view of the submissions made on behalf of the parties concerned, and on a perusal of the records available, this Court is of the considered view that the collection of Rs. 2 crores by the respondent-Department, from the petitioner-company, during the search conducted, on 1-3-2012, cannot be held to be valid in the eye of law.

Even though it has been stated, on behalf of the respondents, that a sum of Rs.2 crores had been collected from the petitioner-company, voluntarily, in respect of its Service Tax liability, it has not been shown, by the respondent, that the petitioner was liable to pay Service Tax to the respondent-Department, relating to the works being carried on by it, during the course of its business.

It is a well settled position in law that no tax could be collected from the assessee, without an appropriate assessment order being passed by the authority concerned and by following the procedure established by law. However, in the present case, it is noted that no such procedures had been followed by the respondent, while collecting the sum of Rs. 2 crores, from the petitioner-company, during the search conducted, on 1-3-2012. In such circumstances, this Court finds it appropriate to direct the respondents to return the sum of Rs. 2 Crores, collected from the petitioner, during the search conducted, on 1-3-2012, within a period of ten days from the date of receipt of a copy of this order. Accordingly, the writ petition stands allowed. No costs.

Decision:- Appeal allowed.

Comment:-The substance of this case is that no tax can be collected from assessee without a proper assessment order being passed in accordance with provisions contained in the law. Accordingly, the amount deposited as “tax” in pursuant to the search proceedings is invalid and illegal unless and until it is backed by order reflecting tax dues on the part of the assessee.

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PJ/Case Law/2013-14/2011

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