2018 (3) TMI 1390 – TELANGANA & ANDHRA PRADESH HIGH COURT – TMI – Jurisdiction of Court – requirement of fulfillment of Bank Guarantee – petitioners collected the service tax from the service recipients and did not pay the same to the credit of the Central Government. – Bail conditions – The condition, that the petitioners shall furnish bank guarantee for the remaining due amount, within ten days from the date of order of the Court below, imposed, while granting bail to the petitioners, is what is brought into question in the present criminal petitions.
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Held that: – The Court, on the basis of the undertaking given by a party, cannot convert itself into an executing Court to execute the terms agreed by the party, while deciding the bail application – the condition imposed by the Court below to the extent of directing the petitioners to furnish bank guarantee for the remaining amount cannot be sustained and is set aside.
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Petition allowed – decided in favor of petitioner. – C
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the said services, which are liable to service tax. Information was received by DGGSTI, Hyderabad, which suggested that the petitioners collected the service tax from the service recipients and did not pay the same to the credit of the Central Government. Accordingly, investigation was initiated against the petitioners. The scrutiny of the documents, recovered from the petitioners, revealed that the petitioners received consideration, along with service tax thereon, from the service recipients, during the period October 2012 to March 2017. The petitioners collected service tax to a tune of ₹ 4,05,77,984/- and ₹ 2,16,89,832/- respectively from different service recipients but did not pay the same to the credit of the Central Government. Party verification was also done, which indicated that service consideration was paid by the recipients, inclusive of service tax. Hence, the petitioners were held liable for the offence under Section 89 of the Finance Act, 1994 (for short t
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g in excess of the amount specified in the notice. 7. The counsel for the petitioners contends, that the aforesaid conditions were not fulfilled by the prosecution and unless those conditions are fulfilled, the due time for payment of the tax does not arise and hence, the payment does not become due, in order to invoke Section 89 of the Act. 8. The Special Public Prosecutor does not refute the submission of the counsel for the petitioners, that no such notice was served. The Special Public Prosecutor filed a counter affidavit contending, firstly, that the time given for furnishing the bank guarantee has expired by the date of the petitioners approaching this Court and secondly, the petitioners showed the schedule of payment, in the memo dated 14.02.2018, submitted to the Special Court for Trial of Economic Offences. The petitioners were asked to offer their comments and the petitioners appended their signatures on the same along with date, as a token of having seen the memo; the conten
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ion that the order granting bail has become invalid, as, the time permitted for furnishing bank guarantee has expired, it can be said that the said contention is not correct. The time given was ten days from the date of order. The order was passed on 16.02.2018 and the petition was filed on 22.02.2018 and the order was stayed on 26.02.2018. 10. With regard to the undertaking that was given by the petitioners, allegedly, the counsel for the petitioners submits that the undertaking, which is given by their counsel and not the petitioners, does not bind the petitioners. In that regard, he relies on a decision of the Supreme Court in HIMALAYAN COOP. GROUP HOUSIGN SOCIETY v. BALWAN SINGH (2015) 7 SCC 373 wherein it was held that, for lawyers are perceived to be agents of their clients, the law of agency does not apply strictly to client-lawyer relationship; since lawyers also stand in a fiduciary relationship to their clients; their duties are more demanding than those imposed on other agen
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is contention that the undertaking given by the counsel cannot bind his clients i.e. petitioners herein. 11. The scheme of the provisions of the Act was explained by the Delhi High Court in two of its decisions i.e. eBIZ.COM PVT. LTD v. UNION OF INDIA (para 79) 2016 (44) S.T.R. 526 (DEL.) and MAKEMYTRIP (INDIA) PVT. LTD. v. UNION OF INDIA (para 116) 2016 (44) S.T.R. 481 (DEL.) and the relevant portion of para 79 is as under: 79. To summarise the conclusions in this judgment: (i) The scheme of the provisions of the Finance Act 1994 (FA), does not permit the DGCEI or for that matter the Service Tax Department (ST Department) to by-pass the procedure as set out in Section 73A (3) and (4) of the FA before going ahead with the arrest of a person under Sections 90 and 91 of the FA. The power of arrest is to be used with great circumspection and not casually. It is not to be straightway presumed by the DGCEI, without following the procedure under Section 73A (3) and (4) of the FA, that a pers
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wered and authorised in that behalf to be satisfied that a person has committed an offence under Section 89 (1) (d) of the FA, it would require an enquiry to be conducted by giving an opportunity to the person sought to be arrested to explain the materials and circumstances gathered against such person, which according to the officer points to the commission of an offence. Specific to Section 89 (1) (d) of the FA, it has to be determined with some degree of certainty that a person has collected service tax but has failed to pay the amount so collected to the Central Government beyond the period of six months from the date on which such payment is due, and further that the amount exceeds ₹ 50 lakhs (now enhanced to ₹ 1 crore) The Court observed that, in the case with which it was dealing, the SCN was not even issued and determination of the service tax arrears was not made and in those circumstances, resorting to extreme coercive measure of arrest followed by detention of th
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hat they have no fundamental right to construct hutments on pavements and that they will not object to their demolition after October 15, 1981, they are entitled to assert that any such action on the part of public authorities will in violation of their fundamental rights. The Supreme Court was dealing with a case of pavement dwellers where the dwellers gave an undertaking to vacate the footpaths and that undertaking was brought against the footpath dwellers therein and while appreciating the violation of such undertaking, the Supreme Court held as above. It further held that there can be no estoppel against the Constitution; the Constitution is not only the paramount law of the land but it is the source and sustenance of all laws; the doctrine of estoppel is based on the principle that consistency in word and action imparts certainty and honesty to human affairs; if a person makes a representation to another, on the faith of which the latter acts to his prejudice, the former cannot re
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personal freedoms on promise of transitory, immediate benefits. 13. In support of his contention that it is not only estoppel against Constitution that is held to be invalid but also against any Statute, the counsel for the petitioners takes support of the decision of the Supreme Court in STATE OF UTTAR PRADESH v. UTTAR PRADESH RAJYA KHANIJ VIKAS NIGAM SANGHARSH SAMITI (2008) 12 SCC 675 wherein it was held that from the record it appears that it was the case of the Secretary of the Corporation that no such assertion was given by him to the Court; but even if he had given such assertion it was of no consequence since in the teeth of the Statutory rules, such assertion had no legal efficacy. 14. In the light of the above legal position, the decision of the High Court of Chhattisgarh in Miscellaneous Criminal Case No.4980 of 2013 dated 22.11.2013, on which the Special Public Prosecutor relies upon, cannot be followed. In the said case, the Court relied on the undertaking given by a party
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