Bharat Sanchar Nigam LTD Through Its Deputy General Manager Finance Mrs Smita Kujur vs. Union Of INDIA Through The Commissioner CGST And Central Excise

Facts

The petitioner, Bharat Sanchar Nigam Ltd. (BSNL), filed a writ petition before the Jharkhand High Court seeking interim protection against coercive recovery actions by the revenue authorities. BSNL's appeal against an Order-in-Original dated 27.02.2007, passed by the Commissioner CGST and Central Excise, was dismissed for default by the CESTAT, Eastern Zone, Kolkata, on 29.09.2016. BSNL had previously obtained interim protection from the CESTAT on 01.07.2015, subject to a pre-deposit of 10% of the CENVAT Credit, amounting to Rs. 16,33,750/-. A restoration application for the dismissed appeal is pending before the CESTAT, with the next hearing scheduled for 23.05.2022. Meanwhile, BSNL received a recovery notice dated 08.03.2022 for the total service tax and penalty of Rs. 3,09,92,806/- plus interest, threatening freezing of bank accounts.

Held

The Court, considering the narrow canvas of the dispute, held that since the restoration petition was pending before the CESTAT and the petitioner had previously been granted interim protection upon making a pre-deposit, it was inclined to grant interim protection. The Court directed that the petitioner be protected from any coercive steps by the respondents until 23.05.2022, the date on which the matter is posted before the CESTAT, Eastern Zone, Kolkata. The Court also noted that the CESTAT would endeavor to take up the case on or around that date. It was made clear that the interim order would cease to operate on 23.05.2022. The Court explicitly stated that it had not gone into the merits of the case of the parties. The writ petition was disposed of with directions for communication of the order to the CESTAT and service of the order copy by the petitioner.

Key Issues

1. Whether the petitioner is entitled to interim protection from coercive recovery proceedings by the revenue authorities until the disposal of its restoration application by the CESTAT? Petitioner's contention: The petitioner argued that a recovery notice threatening freezing of bank accounts had been issued, and it approached the High Court for protection from such coercive action until its pending restoration application before the CESTAT is decided. It highlighted that it had previously obtained interim protection upon making a pre-deposit. Respondents' contention: The respondents acknowledged that the restoration application was pending before the CESTAT and the next hearing was scheduled for 23.05.2022. They noted that while a single-member bench of the CESTAT was functioning regularly, the Division Bench was functioning intermittently. They also pointed out that the petitioner had not taken diligent steps since the dismissal of its appeal in September 2016 and had failed to deposit the arrear amount or obtain a stay.