Ramchandra Ajitsinh Patankar And Anr vs. The Union Of INDIA Thru The Secretary, Ministry Of Finance , Dept. Of Revenue And Ors

Held

The Court held that the attachment of the Petitioners' bank accounts in Allahabad Bank, Kolhapur, was bad in law. The reasoning was based on the undisputed fact that M/s. Sampark, the entity liable for the dues, had deposited 10% of the confirmed demand in terms of Section 35F of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1944, for its pending appeal before the Tribunal. The Court relied on CBDT Circular Nos. 984 and 1053, which are binding on the revenue authorities and prohibit coercive proceedings when such deposits are made and an appeal is awaiting disposal. The Court found the continued attachment of the Petitioners' bank accounts to be in the face of these binding circulars. The ratio decidendi is that revenue authorities cannot resort to coercive recovery measures, including attachment of personal bank accounts of directors, when the assessee has complied with the pre-deposit requirements for an appeal and the appeal is pending, as per binding circulars. The Court directed the Respondent, particularly the Assistant Commissioner of Service Tax, to vacate the attachment of the Petitioners' bank accounts and inform the bank forthwith. The Court also noted that the Petitioners' residential flat had been attached as security and that the Petitioners were agreeable to this attachment continuing until the disposal of M/s. Sampark's appeal.

Facts

The Petitioners, directors of M/s. Sampark Marketing and Advertising Solutions Pvt. Ltd. (M/s. Sampark), challenged a recovery notice dated April 5, 2018, and the consequent attachment of their six bank accounts. This attachment was for dues payable by M/s. Sampark under the Finance Act, 1944, as communicated by Allahabad Bank on May 21, 2018. M/s. Sampark had received an order on October 14, 2011, confirming dues of Rs. 25.95 lakhs. After filing an appeal to the Commissioner (Appeals) on May 16, 2018, M/s. Sampark deposited 7.5% of the confirmed demand. The Commissioner (Appeals) dismissed the appeal on January 18, 2019. M/s. Sampark then filed a further appeal to the Tribunal, depositing 10% of the confirmed demand. The Petitioners argued that despite these deposits and pending appeals, their bank accounts were attached, and their residential flat was also attached as security.

Key Issues

1. Whether the attachment of the Petitioners' bank accounts is bad in law, considering that M/s. Sampark has made the requisite deposit under Section 35F of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1944, and has filed an appeal before the Tribunal. Contentions: Petitioner: The Petitioners argued that the attachment of their bank accounts was contrary to the binding CBDT Circulars Nos. 984 and 1053. These circulars stipulate that coercive proceedings should not be adopted when the required deposit (7.5% or 10%) is made for an appeal before the Commissioner (Appeals) or the Tribunal. They contended that since M/s. Sampark had deposited 10% of the demand for its appeal before the Tribunal, the attachment of their personal bank accounts was unjustified and should be vacated, especially since their residential flat was already attached as security. Respondent: The judgment records no specific arguments made by the Respondent.