Page 53 - GSTL_30th April 2020_Vol 35_Part 5

2020 ] BRAHMAPUTRA TELE PRODUCTIONS PVT. LTD. v. STATE BANK OF INDIA 539
tent Central Excise Officer (now, GST Officer) shall issue show cause notice to the
assessee within 30 months as to why the amount specified in the notice should
not be paid. This period of 30 months is extendable up to 5 years in a case of
fraud, collusion, willful mistatement etc. No such notice was issued to the peti-
tioner within 30 months. Without issuing such show cause notice under Section
73, impugned garnishee notices could not have been issued under Section 87(b)
of the Finance Act, 1994. Referring to Section 75 of the Finance Act, 1994, Learned
Counsel submits in case of failure to pay tax or any part thereof within the peri-
od prescribed, simple interest @ not below 10% and not exceeding 36% per an-
num may be levied. Therefore, though levy of interest in a case covered under
Section 73 may be automatic, there is a wide range regarding payment of inter-
est, i.e., between 10% to 36%. Application of mind and adjudication would be
required for a particular rate of interest that may be imposed on a defaulting
dealer.
12.1 In the instant case, respondent No. 2 had automatically imposed
interest at the highest rate which is not justified. Learned Counsel for the peti-
tioner has placed reliance on a decision of the Single Bench of the Karnataka
High Court in Prasanthi v. Union of India; W.P. (C) No. 14054/2015, decided on
29-4-2015 [2016 (41) S.T.R. 392 (Kar.)] and contends that garnishee notices, not to
speak of imposition of interest, can only be issued post adjudication. Without
adjudication of liability and interest, no garnishee notice can be issued.
12.2 Though Learned Counsel for the petitioner had made other sub-
missions regarding Section 174 of the Central Goods and Services Tax Act, 2017,
more particularly, relating to omission of Finance Act, 1994, considering the na-
ture of dispute and the order which the Court proposes to pass, it may not be
necessary to refer to such submissions made and thereafter to make deliberations
thereon.
13. Mr. B. Sarma, Learned Standing Counsel, Central Excise Depart-
ment for respondent No. 2, has referred to the averments made in the counter
affidavit and submits that petitioner is a defaulter of service tax liability amount-
ing to ` 6,05,07,272.00 which has accumulated since the year 2013. The service tax
amount has already been collected from the customers during the period from
April, 2013 to September, 2016, but not paid to the Government exchequer de-
spite several communications and reminders. Ultimately, the Department had to
issue notice to the banker of the petitioner under Section 87(b)(i) of the Finance
Act, 1994. On such notice, State Bank of India had remitted an amount of
` 8,10,000.00. Petitioner itself came forward and assured the Commissioner to
pay the entire outstanding dues in eight equated quarterly installments. Howev-
er, not a single installment has been paid. Because of such assurance, the De-
partment did not take any further action till January, 2019. Though substantial
amounts were deposited in the bank account of the petitioner in the State Bank of
India, Commercial Branch, these amounts were debited by the petitioner instead
of being credited into the Central Government exchequer. Regarding payment of
instalments, he submits that as per circular dated 28-2-2015, Commissioner may
permit payment of arrears in installments up to a maximum of 24 monthly in-
stallments and the Chief Commissioner may permit up to maximum of 36
monthly installments. However, permission to pay dues in installments is subject
to the condition that the authority must be satisfied that the assessee is not a fre-
quent defaulter and that the financial condition of the defaulter is under tempo-
rary distress. In so far petitioner is concerned, balance sheets for the years 2013-
2014 to 2017-2018 do not indicate any financial distress of the petitioner. There-
GST LAW TIMES  30th April 2020  53