Service Tax Demand u/s 73(1) of Finance Act: Calcutta HC allows Payment in 8 Instalments, Lifts Account Attachment Subject to Conditions [Read Order]

The Calcutta High Court permitted the petitioner to pay service tax dues determined under Section 73(1) of the Finance Act, 1994, in eight installments, and lifted the attachment over his bank account, subject to specific conditions ensuring revenue protection.

The petitioner, Subrata Mondal challenged an order-in-original dated 28 February 2024, passed by the Additional Commissioner, CGST & CX, Kolkata North Commissionerate, under Section 73(1) of the Finance Act read with Section 174(2)(e) of the CGST Act, 2017.

During the hearing, counsel for the petitioner stated that while an appeal against the order had already been filed though belatedly, the petitioner was willing to discharge the outstanding service tax dues in installments, provided the attachment on his bank account was lifted.

The petitioner’s bank account with Punjab National Bank held approximately ₹35.79 lakh, and a bank statement was produced before the Court in support of the submission.

Opposing the plea, counsel for the revenue submitted that if the petitioner intended to pay the entire tax liability, it should be done in one lump sum and not in installments.

Justice Raja Basu Chowdhury, after hearing both sides, observed that since the petitioner had already filed an appeal and made the required pre-deposit, and was voluntarily willing to pay the assessed dues to secure the lifting of the attachment, it would be appropriate to allow conditional installment payments.

The Court directed that the petitioner first make a lump-sum payment of ₹10 lakh within three weeks, while ₹10 lakh would remain frozen in his bank account as security till that payment is verified.

After proof of such payment being furnished, the bank account attachment would stand released, and the petitioner would be allowed to utilize the retained ₹10 lakh amount.

The remaining tax dues were permitted to be discharged in eight equal monthly installments, commencing from the month following the issuance of payment confirmation by the appellate authority.

The High Court further directed the appellate authority to hear and dispose of the petitioner’s appeal on merits, and clarified that all amounts paid by the petitioner would remain subject to the outcome of the appeal. With these directions, the writ petition was disposed of.

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