M/S. Brahmaputra Tele Productions PVT. LTD. vs. State Bank Of INDIA And Anr.

Held

The Court held that the notices issued under Section 87(b) of the Finance Act, 1994, read with Section 174(2)(e) of the Central Goods and Service Tax Act, 2017, would not be acted upon until further orders, despite being issued prior to the interim order. The Court noted that the interim order dated 20.02.2019 was still in effect. The reasoning was that since the interim order was holding the field, no further steps could be taken based on these notices. The Court explicitly stated that these notices would be subject to the outcome of the writ petition. The application for stay was disposed of with these directions. The Court did not decide on the merits of the adjudication or the petitioner's liability, but rather on the procedural aspect of issuing recovery notices without adjudication and in light of the existing interim protection.

Facts

The petitioner, M/s. Brahmaputra Tele Productions Pvt. Ltd., filed an Interlocutory Application (IA) seeking a stay on notices issued by the Assistant Commissioner of Central Excise and GST Division-I, Guwahati. These notices were issued under Section 87(b) of the Finance Act, 1994, read with Section 174(2)(e) of the Central Goods and Service Taxes Act, 2017. The petitioner's primary grievance was that these notices were issued without adjudicating its service tax liability and involved a mechanical levy of interest. The petitioner argued that recovery proceedings without prior adjudication and quantification of dues are impermissible. The petitioner also contended that the notices caused prejudice despite an interim protection order previously granted by the Court. The respondent argued that the notices predated the interim order and no coercive measures have been taken since. The respondent also highlighted the petitioner's substantial outstanding dues and questioned the permissibility of installment payments.

Key Issues

1. Whether notices issued under Section 87(b) of the Finance Act, 1994, read with Section 174(2)(e) of the Central Goods and Service Taxes Act, 2017, are permissible without prior adjudication and quantification of service tax liability by the revenue authorities? Petitioner's Arguments: The petitioner contended that the notices were issued mechanically without adjudicating the service tax liability. They argued that the levy of interest is not automatic and requires the exercise of discretionary powers by the adjudicating authority, which was not done. Reliance was placed on Sections 73 and 75 of the Finance Act, 1994, and a Karnataka High Court decision in *Ms. Prashanthi Vs. Union of India* (WP(C) No.14054/2015), which held that recovery proceedings de hors adjudication are not permissible. Revenue's Arguments: The respondent argued that the notices were issued prior to the interim order dated 20.02.2019. They stated that no coercive measures have been taken against the petitioner after the interim order. The respondent also pointed out the petitioner's significant outstanding dues and questioned the possibility of installment payments.