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2017 DIGILAW 204 (GUJ)

Vintech Shoppe Pvt. Ltd. v. Union of India

2017-01-25

B.N.KARIA, M.R.SHAH

body2017
ORDER : M.R. Shah, J. 1. As common question of law and facts arise in both these petitions, they are heard, decided and disposed of by this common order. 2. By way of these petitions under Article 226 of the Constitution of India, the respective petitioners have challenged the order of provisional attachment of the properties of the respective petitioners, passed under section 73(C) of the Finance Act, 1994 and Service Tax (Provisional Attachment of Property) Rules, 2008. During the pendency of the present petitions, subsequently the Chief Commissioner of Central Excise, Customs and Service Tax has extended the period of provisional attachment for a further period of one year, and therefore, the respective petitioners challenged the respective orders of extension passed by the Chief Commissioner. 3. Facts leading to the present Special Civil Applications, in nutshell, are as under:- 3.01. That information was received by the Central Excise, Customs and Service Tax Commissionerate indicating that M/s. Vintech Shoppe Pvt. Ltd., having its registered office at Surat is engaged in the business of franchisee concept business under the brand "hrp franchise" wherein they appointed franchisee by charging amount and the said activity is taxable service, squarely covered under the category of "Franchise Service" and also not included in Negative List from 1/7/2012. It was also gathered that M/s. Vintech Shoppe Pvt. Ltd., Surat is a Private Limited Company having Chairman-cum-Managing Director Mr. Jignesh G. Panseria. Further, it was also gathered that M/s. Vintech Shoppe Pvt. Ltd., Surat is not registered with the Service Tax Department for providing taxable services under the category "Franchise Service" and accordingly, they have not paid any Service Tax to the Government Exchequer in respect of income earned from the franchisee business. 3.02. Accordingly, based on the above specific intelligence, search was conducted at the premises of M/s. Vintech Shoppe Pvt. Ltd. on 16/7/2015. Relevant documents came to be seized by the search party. During the search and on the basis of the investigation it was revealed that M/s. Vintech Shoppe Pvt. Ltd. had received Rs. 2,86,32,48,953/- (Taxable value = Rs. 2,54,43,48,159/-) involving Service Tax of Rs. 31,79,00,794/- (Rupees Thirty One Crore Seventy Nine Lacs Seven Hundred Ninety Four only) during the period from 2010-11 to 2015-16 on accounting of providing representational rights to franchisees appointed by them. 3.03. 2,86,32,48,953/- (Taxable value = Rs. 2,54,43,48,159/-) involving Service Tax of Rs. 31,79,00,794/- (Rupees Thirty One Crore Seventy Nine Lacs Seven Hundred Ninety Four only) during the period from 2010-11 to 2015-16 on accounting of providing representational rights to franchisees appointed by them. 3.03. It was further revealed that such franchisee service provided by them is classifiable under "Franchise Service"; however, they failed to pay the applicable Service Tax leviable thereon to the Government Account. 3.04. M/s. Vintech Shoppe Pvt. Ltd. had voluntarily deposited Rs. 1,61,50,000/- till the completion of investigation. 3.05. Accordingly, a Show Cause Notice dated 21/10/2015 was issued to M/s. Vintech Shoppe Pvt. Ltd. (petitioner of Special Civil Application No. 7727 of 2016) and Mr. Jignesh Dhanshyambhai Panseriya, Chairman and Managing Director of M/s. Vintech Shoppe Pvt. Ltd., under the proviso to sub-section (1) of Section 73 of the Finance Act, 1994, by the Commissioner, Central Excise, Customs and Service Tax, Surat-I, demanding tax amounting to Rs. 31,79,00,794/- (Rupees Thirty One Crore Seventy Nine Lacs Seven Hundred Ninety Four only) along with interest and penalty applicable thereon. 3.06. A similar Show Cause Notice was also issued on 21/10/2015 to M/s. Vintech Infrastructure, Surat (petitioner of Special Civil Application No. 7737 of 2016) by the Commissioner, Central Excise, Customs and Service Tax, Surat-I, demanding tax amounting to Rs. 1,58,41,969/- (Rupees One Crore Fifty Eight Lacs Forty One Thousand Nine Hundred Sixty Nine only) along with interest and penalty applicable thereon. 3.07. Thus, the following Show Cause Notice has been issued to M/s. Vintech Shoppe Pvt. Ltd. and its associate viz. M/s. Vintech Infrastructure, Surat and M/s. Ramdev Developers, Surat, under the proviso to sub-section (1) of section 73 of the Finance Act, 1994, as under:- Sr. No. Name of the Noticee/s SCN F. No. & Date Sertice Tax Demanded in (Rs.) 1 A. M/s.Vintech shoppe Private Limited, 3 rd Floor, Aalay Building, Above IDBI Bank, Parvat Patia, Puna-Khambharia Road, Surat: B. Shri Jignesh Ghanshyambhai Paneseriya, Chairman & Managing Director, M/.s. Vintech Shoppe Private Limited, Surat. V/ST/15-06/0A/15-16 dated 21.10.2015 Rs.31,79,00,794/- plus interest and penalty as applicable. 2 M/s. Vintech Infrastructure, 421-422, Deepkamal Commercial Hub, Nr. Sarthana Zoon, Varachha Road, Surat. V/ST/15-07/0A/15-16 dated 21.10.2015 Rs.1,58,41,969/- plus interest and penalty as applicable. 3 M/s. Ramdev Developers, 3rd Floor, Aalay Building, Above IDBI Bank, Parvat Patia, Puna-Khambhari Road, Surat. V/ST/15-08/0A/15-16 dated 23.10.2015 Rs.71,04,930/- plus interest and penalty as applicable. V/ST/15-06/0A/15-16 dated 21.10.2015 Rs.31,79,00,794/- plus interest and penalty as applicable. 2 M/s. Vintech Infrastructure, 421-422, Deepkamal Commercial Hub, Nr. Sarthana Zoon, Varachha Road, Surat. V/ST/15-07/0A/15-16 dated 21.10.2015 Rs.1,58,41,969/- plus interest and penalty as applicable. 3 M/s. Ramdev Developers, 3rd Floor, Aalay Building, Above IDBI Bank, Parvat Patia, Puna-Khambhari Road, Surat. V/ST/15-08/0A/15-16 dated 23.10.2015 Rs.71,04,930/- plus interest and penalty as applicable. Total Service Tax Demand 34,08,47,693/- plus interest and penalty as applicable. 3.08. The Commissioner was of the opinion that with a view to protect the interest of the government dues, properties of the noticee are required to be provisionally attached under section 73(C) of the Finance Act, 1994 read with Service Tax (Provisional Attachment of Property) Rules, 2008, as it was apprehended that the respective noticee are likely to dispose of the properties hurriedly, the respective petitioners were served with the Show Cause Notices by the Commissioner, by which the respective petitioners were called upon to show cause as to why the properties mentioned in the Show Cause Notices, of M/s. Vintech Shoppe Pvt. Ltd. and M/s. Vintech Infrastructure, Surat should not be put to provisionally attachment in exercise of the powers under section 73(C) of the Finance Act, 1994 and Service Tax (Provisional Attachment of Property) Rules, 2008. 3.09. That after giving fullest opportunity, the Commissioner passed respective orders dated 18/3/2006 of provisional attachment of the properties of the respective petitioners mentioned in the Show Cause Notices. 3.10. Feeling aggrieved and dissatisfied with the impugned orders dated 18/3/2016 passed by the Commissioner of Central Excise, Customs and Service Tax, Surat-I, passed under section 73(C) of the Finance Act, 1994 and Service Tax (Provisional Attachment of Property) Rules, 2008, the respective petitioners have preferred the present Special Civil Applications. 3.11. That during the pendency of the present petitions, the Chief Commissioner passed the respective orders of extension of provisional attachment for a further period of one year. Therefore, by way of amendment, the respective petitioners have also challenged the order passed by the Chief Commissioner, extending the provisional attachment for a further period of one year. 4. Mr. Mishra, learned advocate has appeared on behalf of the respective petitioners and Ms. Avni Mehta, learned advocate has appeared on behalf of the department. 5. Mr. Therefore, by way of amendment, the respective petitioners have also challenged the order passed by the Chief Commissioner, extending the provisional attachment for a further period of one year. 4. Mr. Mishra, learned advocate has appeared on behalf of the respective petitioners and Ms. Avni Mehta, learned advocate has appeared on behalf of the department. 5. Mr. Mishra, learned advocate appearing on behalf of the respective petitioners has mainly concentrated on the orders of extension passed by the Chief Commissioner extending the provisional attachment for a further period of one year, as so far as the original provisional attachment orders passed by the Commissioner are concerned, by efflux of time the validity period of provisional attachment orders passed under section 73(c) of the Finance Act, 1994 has expired. 5.01. Mr. Mishra, learned advocate appearing on behalf of the respective petitioners has vehemently submitted that the impugned orders of extension of provisional attachment passed by the Chief Commissioner are ex-facie illegal, bad in law, non-speaking and in violation of the principles of natural justice. It is submitted that the impugned orders passed by the Chief Commissioner extending the period of provisional attachment is non-speaking orders and as such no reasons have been assigned while extending the period of provisional attachment. 5.02. Mr. Mishra, learned advocate appearing on behalf of the respective petitioners has further submitted that before passing the impugned orders of extension extending the period of provisional attachment, no opportunity of being heard has been given to the respective petitioners and therefore, the same are in breach of and/or in violation of the principles of natural justice. 5.03. Mr. Mishra, learned advocate appearing on behalf of the respective petitioners has further submitted that against the total payable demand raised against the partnership firm is of Rs. 1.51 Crores (rounded off), whereas the properties of the partners of the partnership firm and the partners attached under the impugned orders are worth more than Rs. 6 Crores and therefore, the provisional attachment of the properties worth more than Rs. 6 Crores is wholly impermissible. Making above submissions and relying upon the decision of the Hon'ble Supreme Court in the case of Asstt. 6 Crores and therefore, the provisional attachment of the properties worth more than Rs. 6 Crores is wholly impermissible. Making above submissions and relying upon the decision of the Hon'ble Supreme Court in the case of Asstt. Commr., Commercial Tax Department Versus Shukla & Brothers, reported in (2010) 254 ELT 6 (S.C.) as well as decision of the Hon'ble Supreme Court in the case of Sahara India (Firm), Lucknow Versus Commissioner of Income Tax, Central-I and another, reported in (2008) 14 SCC 151 , it is requested to allow the present petitions. 6. Both these petitions are vehemently opposed by Ms. Avni Mehta, learned advocate appearing on behalf of the respondent department - revenue. It is submitted that while passing the orders of provisional attachment of the properties, the Commissioner gave fullest opportunity to the respective petitioners. It is submitted that Show Cause Notices were issued by the Commissioner upon the respective petitioners by which the respective petitioners were called upon to show cause as to why the properties mentioned in the show cause notices should not be provisionally attached under section 73(C) of the Finance Act, 1994 and Service Tax (Provisional Attachment of Property) Rules, 2008. It is submitted that thereafter after giving fullest opportunity to the respective petitioners and with a view to protect the interest of the revenue and it was observed and found that the respective petitioners are likely to dispose of the properties hurriedly with a view to defeat the demand raised, when the orders of provisional attachment have been passed, the same cannot be said to be erroneous and/or illegal. 6.01 Ms. Avni Mehta, learned advocate appearing on behalf of the respondent department - revenue has further submitted that so far as the challenge to the impugned orders passed by the Chief Commissioner of extension of provisional attachment for a further period of one year on the ground that the same are in breach of the principles of natural justice is concerned, it is submitted that fullest opportunity was given to the respective petitioners by the Commissioner before passing the orders under section 73(C) of the Finance Act, 1994, as required under section 73(C)(1) of the Finance Act, 1994. It is submitted that there is no such requirement of giving opportunity of being heard by the Chief Commissioner while passing orders of extension of provisional attachment under sub-section 2 of section 73(C) of the Finance Act, 1994. It is submitted that therefore, on the aforesaid ground the impugned orders passed by the Chief Commissioner of extension of provisional attachment for a further period of one year, cannot be said to be illegal and/or in breach of principles of natural justice. 6.02 Now, so far as the contention on behalf of the respective petitioners that the orders passed by the Chief Commissioner extending the provisional attachment for a further period of one year are non-speaking orders, is concerned, it is vehemently submitted by Ms. Avni Mehta, learned advocate appearing on behalf of the respondent department - revenue that considering the material on record and having satisfied that the period of provisional attachment is required to be further extended, the Chief Commissioner has passed the impugned orders, which cannot be said to be non-speaking orders. Making above submissions it is requested to dismiss the present petitions. 7. Heard the learned advocates appearing on behalf of the respective parties at length. 7.01 At the outset, it is required to be noted that Show Cause Notices have been issued against the respective petitioners demanding total sum of Rs. 34,08,47,693/- plus interest and penalty towards Service Tax, in exercise of powers under proviso to sub-section (1) of section 73 of the Finance Act, 1994. That it was observed that large amount of government dues are pending from the respective petitioners and they are likely to dispose of the properties mentioned in the Show Cause Notices hurriedly and therefore, with a view to protect the interest of the government dues, the properties of the partners mentioned in the Show Cause Notices are provisionally attached under section 73(C) of the Finance Act, 1994 and Service Tax (Provisional Attachment of Property) Rules, 2008. That earlier the orders of provisional attachment came to be passed against the respective petitioners after giving fullest opportunity of being heard and detailed, speaking and reasoned orders have been passed by the Commissioner of provisional attachment of the properties of the respective petitioners. That earlier the orders of provisional attachment came to be passed against the respective petitioners after giving fullest opportunity of being heard and detailed, speaking and reasoned orders have been passed by the Commissioner of provisional attachment of the properties of the respective petitioners. Section 73(C) of the Finance Act, 1994 and the relevant Rules namely Service Tax (Provisional Attachment of Property) Rules, 2008, more particularly Rule 8 provides for provisional attachment of the properties belonging to person/firm against whom notices have been served for demanding Service Tax. Under the circumstances, it cannot be said that the orders of provisional attachment passed by the Commissioner are in any way illegal and/or dehors the provisions of the statute. 7.02 Now, so far as the challenge to the impugned orders passed by the Chief Commissioner of extending provisional attachment for a further period of one year are concerned, it is required to be noted that section 73(2) of the Finance Act, 1994 permits the Chief Commissioner to extend the period of provisional attachment. Under the statute, no hearing is provided before passing the order of extension of provisional attachment under section 73(C)(2) of the Finance Act, 1994, like while passing original order of provisional attachment by the Commissioner under section 73(C)(1) of the Finance Act, 1994. Section 73(C) of the Act reads as under:- "Section 73(C). Provisional attachment to protect revenue in certain cases.- (1) Where, during the pendency of any proceeding under section 73 or section 73A, the Central Excise Officer is of the opinion that for the purpose of protecting the interest of revenue, it is necessary so to do, he may, with the previous approval of the [Principal Commissioner of Central Excise or Commissioner of Central Excise], by order in writing, attach provisionally any property belonging to the person on whom notice is served under sub-section (1) of section 73 or sub-section (3) of section 73A, as the case may be, in such manner as may be prescribed. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section-section (1); Provided that the [Principal Commissioner of Central Excise and Chief Commissioner of Central Excise] may for the reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years]." 7.03 Therefore, whenever the Legislature intended to afford hearing/personal hearing, the same has been provided like section 73(C)(1) of the Act. Under the circumstances, on the ground that before passing the impugned orders of extension of provisional attachment by the Chief Commissioner, no opportunity of being heard were given to the respective petitioners, and therefore, the impugned orders of extension of provisional attachment are not required to be quashed and set aside, has no substance and cannot be accepted, more particularly considering the fact that before passing order under section 73(C)(1), fullest opportunity have been given to the respective petitioners and thereafter the orders under section 73(C)(1) have been passed. 7.04 Now, so far as the submissions on behalf of the respective petitioners that the impugned orders passed by the Chief Commissioner of extension of provisional attachment are non-speaking orders is concerned, on considering the impugned orders passed by the Chief Commissioner, it cannot be said that no reasons at all have been assigned by the Chief Commissioner. From the impugned orders of extension of provisional attachment passed by the Chief Commissioner it appears that the learned Chief Commissioner has considered at length the records of the case and all the relevant facts, details and statutory provisions. He has also considered the material on record demonstrating that the investigation resulted in issue of demand and recovery of service tax amounting to Rs. 31,79,00,794/- against M/s. Vintech and total service tax dues amounting to Rs. 34,08,47,693/- against M/s. Vintech and its other associates. While passing the order of extension of provisional attachment in para 4, the Chief Commissioner observed as under:- "I have considered at length the records of the case and all relevant facts, details and statutory provisions. The material available on record demonstrate that investigations resulted in issue of demand and recovery of service tax dues amounting to Rs. While passing the order of extension of provisional attachment in para 4, the Chief Commissioner observed as under:- "I have considered at length the records of the case and all relevant facts, details and statutory provisions. The material available on record demonstrate that investigations resulted in issue of demand and recovery of service tax dues amounting to Rs. 31,79,00,794/- against M/s. Vintech and a total of service tax dues amounting to Rs. 34,08,47,693/- against M/s. Vintech and other associates. After considering all the facts and circumstances, I consider that it is essential for the purpose of protecting the interest of revenue to extend the period of attachment of specified properties for a further period of one year in terms of proviso to sub-section (2) of section 73C of the Act." Thus, it cannot be said that the orders of extension of provisional attachment for a further period of one year, are non-speaking order, as contended by the learned advocate appearing on behalf of the respective petitioners. 7.05 At this stage, it is required to be noted that we asked specific question to the learned advocate appearing on behalf of the respective petitioners, whether the respective petitioners are ready and willing to furnish Security/Bank Guarantee of the amount of the dues towards Service Tax, may be from the properties provisionally attached, it is submitted by the learned advocate appearing on behalf of the respective petitioners that on most of the properties provisionally attached, there are construction of row houses. Thus, it appears that even the properties in question which are provisionally attached may not have no clear title. 7.06. Under the circumstances, it cannot be said the orders passed by the Commissioner of provisional attachment and the orders passed by the Chief Commissioner extending the provisional attachment for a further period of one year of the properties of the respective petitioners/Companies as mentioned in the Show Cause Notices are illegal and/or contrary to the provisions of the statute. The impugned orders are passed with a view to protect the interest of the government dues of huge amount of demand of Service Tax. 8. In view of the above and for the reasons stated above, both these petitions deserve to be dismissed and are accordingly dismissed. Notice is discharged in each of the petitions. In the facts and circumstances of the case, there shall be no order as to costs.