Department cannot initiate recovery proceedings against Assessee where Stay application is pending before Tribunal for the reasons not attributable to him
Fashion Suitings Private Limited (the Petitioner) received a Demand Notice dated October 8, 2013 for the payment of Service tax amounting to Rs 15,78,40,282/- with interest and penalty amounting to Rs. 17,08,00,086/- against the Order-in-Original dated October 26, 2012 during the pendency of Stay application before the Hon’ble Tribunal.
The Petitioner had already filed an appeal along with Stay application before the Hon’ble Tribunal on February 7, 2013.TheStay application was listed on several dates before the Hon’ble Tribunal but got adjourned either due to non-availability of the Bench or for not reaching the matter before the Bench.
Accordingly the Department issued a Demand Notice on expiry of specified period in terms of the Circular No. 967/01/2013-CX (“the Circular”) dated January 1, 2013.
Being aggrieved, the Petitioner filled a Writ Petition before the Hon’ble High Court of Rajasthan contending that in the case of Manglam Cement Ltd. Vs. Superintendent of Central Excise [2013 (290) ELT 353 (Raj.)] (“Manglam Cement case”), the Circular has already been declared non est by this Court where the Stay application is pending for any reason not attributable to the Assessee.
The Hon’ble High Court of Rajasthan after considering the Manglam Cement case held that since this Court had already held that the Circular was non est insofar relating to situation where Stay applications remain pending in Appellate fora, it was strange that the Department had chosen to issue notice on basis of same Circular. It was held by the Hon’ble High Court that the said recovery proceedings were a show of total disrespect to and defiance of order of High Court and gave rise to serious questions on approach and intentions of Department.
Hence, Writ petition was admitted, recovery proceedings were stayed and a contempt notice was issued to the Superintendent with a direction to register suomotu contempt petition against him in personal name.