Vir Retail Private Limited vs Union of India

Ram Mohan Reddy, J.—The Revenue has preferred applications for a direction to the writ petitioners-assessee to pay and tender service tax amount due by them in terms of the interim order dated October 14, 2011 in Retailers Association of India v. Union of India C.A. No. 8390 of 2011, of the apex court.

Although no objections are filed to the applications, nevertheless, learned senior counsel for some of the petitioners and counsel for other petitioners, in unison, submit that pursuant to the interim order directing payment of 50 per cent of the arrears of service tax within six months in three equated instalments, at the same time, the Supreme Court on the very same day, by a subsequent order in the case of Home Solutions Retails India Ltd. v. Union of India in SLP Civil No. 27636 of 2011, observed thus:

Permission is granted to the appellant to place on record the details of the arrears towards the service tax up to September 30, 2011, within two weeks.

In the meanwhile, no coercive steps shall be taken against the appellant for recovery of arrears of service tax due on or before September 30, 2011. We clarify that there is no stay of imposition of service tax under sub-clause (zzzz) of clause (105) of section 65 read with section 66 of the Finance Act, 1994 (as amended) in so far as the future liability towards service tax with effect from October 1, 2011 is concerned.

It is no doubt true that the interim order in M/s. Retailers Association of India, indicates that the appellant therein was directed to deposit 50 per cent of the arrears towards tax within six months in three equated instalments on or before November 1, 2011, January 1, 2012 and March 1, 2012 and for the balance 50 per cent to furnish a solvent surety to the satisfaction of the jurisdictional Commissioner as also file affidavit before the apex court within four weeks therefrom, undertaking to pay the balance arrears of service tax stayed in terms of the order and that the successful party in the appeal shall be entitled to interest on the amount stayed by the court at such rate as may be directed during the final disposal of the appeal. However, by another order of even date in Home Solutions Retail India Ltd., the apex court did observe that no coercive steps should be taken against the appellant therein for recovery of arrears of service tax due on or before September 30, 2011.

There is considerable force in the submission of Sri. K.P. Kumar, learned senior counsel for some of the petitioners, that the apex court having observed no coercive steps should be taken against the appellant for recovery of arrears of service tax due on or before September 30, 2011, the same would enure to the benefit of the petitioners and therefore, in effect, the respondent-Revenue must also desist from taking coercive steps in recovering arrears of tax pre-September 30, 2011 from the petitioners, while taxes post-September 30, 2011, are liable to be paid.

Regard being had to the observation supra, it is needless to state that the applications filed by the Revenue to direct the petitioners to pay the amount in terms of the direction in Retailers Association India Ltd., is unavailable to the Revenue.

Sri. N.R. Bhaskar, learned counsel for the Revenue, submits that all the petitions be disposed of, subject to the result of the civil appeals pending before the apex court, in which identical questions of law and that of fact arise for decision making. Learned counsel further hastens to add that the petitioners be directed to pay in the least 25 per cent of the arrears of the tax, i.e., up to September 30, 2011 and for the balance 75 per cent furnish security to the satisfaction of the jurisdictional Commissioner of Service Tax.

Per contra, Sri K.P. Kumar, learned senior counsel for some of the petitioners, submits that this court by an interim order dated December 12, 2011, directed stay of recovery of arrears of tax due up to September 30, 2011 and therefore that interim order does not call for interference. Learned senior counsel further submits that the necessity to direct the petitioners to pay 25 per cent of the arrears of tax would not arise, having regard to the observation of the apex court that the Revenue should not take coercive steps against the assessee for recovery of the arrears of the service tax.

In the circumstances, it is reasonable to direct the petitioners to furnish security to the satisfaction of the jurisdictional Commissioner of Service Tax, in so far as the arrears of tax prior to September 30, 2011 and for the petitioners to await the decision of the apex court.

In the result, the applications are accordingly ordered. Writ petitions are disposed of subject to the decision of the apex court and reserving liberty to the petitioners to make necessary applications to recall the order and seek directions, if any, pursuant to the decision of the apex court. The petitioners to comply with the order within six weeks.