Tata Teleservices (Maharashtra) Ltd vs. Ministry of Finance (Bombay High Court)

Action to recover tax before expiry of statutory period for filing appeal is high-handed & in defiance of law

Though the assessee had a statutory period of three months to file an appeal along with stay application before the CESTAT, the Asst CST directed the assessee to pay the demand within two days and threatened to take coercive action to recover the dues. The assessee filed a Writ Petition contending that the AO’s action was in breach of Circular dated 01.01.2013 issued by CBEC, and the demand was premature because the assessee had the right to file an appeal within 3 months. HELD by the High Court allowing the Petition:

(i) The AO’s insistence that the assessee should pay the amount is contrary to the provisions of the Finance Act which provides for a period of 3 months to file an appeal to the Tribunal. It is also contrary to the circular dated 01.01.2013 issued by the CBEC. The impugned communications, to say the least, is high handed. The statute has advisedly provided a period of three months to an assessee to file an appeal before the appellate authority and also obtain a stay. This is with a view to enable the assessee to seek proper advice and considered opinion on the adjudication order before taking a decision and then challenging the adjudication order in appeal proceedings;

(ii) In case, the Revenue is allowed to adopt coercive measures and/or if the assessee is required to pay tax determined immediately, it would lead to injustice to an assessee, as his opportunity to obtain a stay from the appellate authority would stand foreclosed. Moreover, the inherent right of an appellate authority to stay the order being appealed against would be rendered futile. In fact, this Court in Mahindra & Mahindra Limited (1959-ELT-505) had directed the Revenue to return the amounts recovered by encashing the bank guarantee of the assessee as it was done before the expiry of three months to file an appeal;

(iii) The officers of the Revenue would do well to realize that their job is much more than merely collecting the tax. They are officers of the State, administering the Finance Act, 1994 and fairness in approach to the tax payers and acting in accordance with the Rule of Law is a sine-qua-non in discharge of all its functions;

(iv) The impugned communications are not only in defiance of the CBEC circular dated 01.01.2013 but also in breach of the statutory provisions which gives a period of 3 months to enable the aggrieved party to file an appeal before the appellate authority.