Kamaljeet Singh vs Commissioner of Central Excise

Kanwaljit Singh Ahluwalia, J.—The lawyers are stated to be on indefinite strike. Heard the parties appearing in person and perused the contents of the instant application.

Apprehending their arrest, present petitioners have approached this Court by way of instituting instant application for grant of anticipatory bail under Section 438 Cr.P.C. in a criminal case bearing No. IV(6)95/AE/JP-I/2014, dated 1-7-2014, registered at Commissionerate of Central Excise Jaipur-I for commission of offence punishable under Section 83 read with Section 89(1)(ii) of the Finance Act, 1994.

In the present case, the petitioners claim that they were service providers for extending sanitation services to the Municipal Corporation, which included cleaning of the sewerage.

Mr. Prashant Bansal, representative of petitioners/company, appearing in person submitted that the contract was for providing services and, thus, company is not liable to pay any Service Tax.

On behalf of the petitioners/company, it is further submitted that only in case of "supply of man power" Service Tax can be imposed.

Mr. R.K. Mishra, Additional Commissioner, Central Excise [Service & Tax] Jaipur-I, appearing in person has relied upon provisions of Section 73A(2) of the Finance Act, 1994 to say that if any service provider have charged Service Tax i.e. from the Municipal Corporation, even though no such Service Tax is chargeable, then such service provider is bound to deposit Service Tax calculated in favour of the Revenue. Mr. Mishra further submitted that the Department had collected calculation note-sheet of costing before giving bid by the petitioners in pursuance of the tender floated by the Municipal Corporation and as per calculation note-sheet, the petitioners have included payment of Service Tax. Mr. Mishra also submitted that as per note-sheet of Municipal Corporation, while approving contract/tender, in computation chart, it has been noted that payment of Service Tax is to be made by the Contractor.

After hearing the representative of petitioners/company and the Additional Commissioner, Central Excise [Service Tax] Jaipur-I, two issues arise for consideration of the Court:-

(i) Whether in the facts and circumstances of the present case Service Tax is leviable or not?

(ii) Whether petitioners/company, in the costing had calculated Service Tax and has received the same or not?

Submission of Mr. R.K. Mishra, appearing in person is that the investigation is in progress and is at a sensitive stage and, therefore, to arrive at a true conclusion, qua the abovesaid two issues free hand ought to be given to the Investigating Agency to find out the nature of contract and as to find whether Service Tax has been received or not.

After hearing the representative of petitioners/company and the Additional Commissioner, Central Excise [Service Tax] Jaipur-I, appearing in person, this Court is of the view that at this stage, no impediment can be caused in the investigation, which is in progress, and therefore, free hand ought to be given to the investigator.

However, this Court will trust the better sense and discretion of the Investigating Officer to the effect that he shall affect the arrest of the petitioners only; after if he comes to a definite conclusion that prima facie, offence is made out, arrest of the petitioners necessary to arrive at a truth.

With the observations made herein above, the present application for grant of pre-arrest bail is, hereby, disposed of, without granting bail to the petitioners.

At this stage, representative of the company, appearing in person submitted that till now the payment due towards Department is Rupees Two Crores only and they are ready and willing to deposit the same within a period of ten-days. To respond, Shri Mishra sought permission of the Court, to obtain instructions, from competent authority and reverted back to say, that in case any proposal is received, same shall be duly considered in accordance with provisions of law before affecting arrest of the petitioner.