No arrest for non payment of service tax without show cause notice – Supreme Court upholds Delhi High Court Judgment
ABCAUS Case Law Citation:
ABCAUS 2763 (2019) (01) SC
The Delhi High Court had quashed the arrest for non payment of service tax without show cause notice. The High Court had held that the powers exercised u/s 91 without SCN u/s 73A of the Finance Act 1994 was contrary to the law and in violation of constitutional and fundamental rights under Article 21 of the Constitution.
The Hon’ble Supreme Court observed that the High Court had, after detailed discussion, decided, that it is mandatory to follow the procedure contained in Section 73A(3) and (4) of the said Act before going ahead with the arrest of a person under Sections 90 and 91.
The Apex Court expressed its agreement with the conclusion reached by the Delhi High Court and saw no reason to deviate from it.
In January, 2016, the service tax authorities had arrested the Vice President (Finance) of Make my Trip (MMT). Searches were also undertaken at IBIBO and Yatra along with Cleartrip.
The Delhi High Court had examined the scope of powers of search of DGCEI under Section 82 of the Finance Act, and power of arrest and of taking coercive measures for recovery of service tax dues in terms of Section 91 of the FA, without resorting to the issuance of a show cause notice (SCN) under Sections 73 or 73A of the Finance Act.
The Service Tax Authorities had filed a SLP against the said judgment of the Delhi High Court which has been dismissed by the Apex Court.