M. P. Enterprises And Association LTD. Thru Director vs. The Union Of INDIA Thru The Secretary, Ministry Of Finace , Dept. Of Revenue And Ors

Held

The Court quashed and set aside the impugned notice dated August 30, 2018, issued to Union Bank of India and Axis Bank, attaching the Petitioner's bank accounts. It also quashed and set aside the notice dated August 31, 2018, issued to M/s. Motherson Sumi Systems Ltd. The Court's decision was based on the identical facts and law applicable to a previously decided writ petition (W.P. No. 10085 of 2018) concerning the same Petitioner. The reasoning from that prior order was applied to the present case. However, the Court clarified that any amounts already received by the Revenue pursuant to the impugned notices would be retained by the Respondent until an adjudication order is passed on the show cause notice dated September 8, 2018. Furthermore, the quashing of these notices would not prevent the Revenue from invoking Section 73C of the Act if deemed fit and in accordance with law. The ratio decidendi is that pre-adjudication attachment of bank accounts and directing third parties to pay dues to the assessee, under Section 87(b)(i) of the Finance Act, 1994, may be subject to judicial review and can be set aside if found to be arbitrary or not in accordance with the principles of natural justice, especially when similar issues have been decided in favor of the petitioner.

Facts

The Petitioner, M.P. Enterprises and Associates Ltd., challenged two notices dated August 30, 2018, and August 31, 2018, issued by the Deputy Director in the office of the Director General of GST Intelligence. The notice dated August 30, 2018, directed the attachment and freezing of the Petitioner's bank accounts with Union Bank of India and Axis Bank, and payment of the attached amounts into the treasury. The notice dated August 31, 2018, was issued to the Petitioner's customer, M/s. Motherson Sumi Systems Ltd., directing it to pay any amounts due to the Petitioner into the treasury. These notices were issued for the recovery of Service Tax payable by the Petitioner under Section 87(b)(i) of the Finance Act, 1994. The High Court noted that an identical matter concerning the same Petitioner and similar notices had been decided on the same day.

Key Issues

1. Whether the notices dated August 30, 2018, and August 31, 2018, issued under Section 87(b)(i) of the Finance Act, 1994, for the recovery of Service Tax are valid and legally sustainable. Petitioner's Contention: The Petitioner argued that the impugned notices were issued without following due process and were arbitrary. They relied on the fact that an identical petition (W.P. No. 10085 of 2018) concerning the same Petitioner and similar notices had been decided by the Court on the same day, implying a favorable outcome based on the reasoning in that prior decision. Revenue's Contention: The judgment does not record any specific arguments made by the Revenue or State in defense of the impugned notices. However, the issuance of the notices themselves indicates their position that recovery of Service Tax was warranted.