At, High Court of Judicature at Calcutta
By, THE HONOURABLE MR. JUSTICE ANIRUDDHA BOSE
For the Appellants: Debiprasad Pal and L.K. Gupta, Sr. Advocates, P. Sinha, A. Majumder, A. Mitra and Acharjee, Advocates. For the Respondent: N.C. Roy Choudhury, Sr. Advocate and R. Varadwaj, Advocate.
ANIRUDDHA BOSE, J.
1. The petitioner No. 1 herein is a non-banking financial company engaged in the business, inter alia, of lease financing and hire-purchase. The rest of the petitioners are directors and officers of the petitioner-company.
2. In this writ petition the main grievance of the petitioners is over the process of investigation and in particular the manner of investigation of the petitioners on the allegation of non-payment of service tax. The petitioners have challenged in this writ petition the legislative competence of the Union Government to levy service tax on hire-purchase agreement and lease financing services. Admittedly both these items have been covered under the provisions of Chapters 5 and 5A (sic) (Chapter V and VA) of the Finance Act, 1994. On this aspect the petitioners case is that the transaction as regards services being rendered by the petitioners, the State Legislature has exclusive right to levy any taxes thereon. This aspect of the matter, I am of the view, has to be examined on affidavits.
3. Let affidavit-in-opposition be filed within 29th November 2007; reply thereto, if any, may be filed within 13th December 2007. Liberty to mention the matter for early hearing. A copy of the writ petition ought to be served on the learned Attorney General of India.
4. The second set of grievance of the petitioners relates to allegations of harassive methods of investigation and unauthorised demand. The case of the petitioners is that they have been coerced to make payment of Rs. 20 lakhs towards service tax. In particular, grievance has been made out that the summons has been issued requiring attendance of the officers and directors of the petitioner-company and they are being examined for long hours through the night. At this stage, however, I am not inclined to stall the investigation. But Mr. Roy Choudhury is agreeable to confine the investigation and in particular examination of the petitioners within regular office hours upon service of summons. In view of the submission of Mr. Roy Choudhury as regards examining the witnesses during regular office hours only I am not passing any interim order so far as fixing of time frame for examination of the witnesses is concerned. Dr. Pal in this regard has relied on a notice which deals with the manner in which the managing directors and high officers are being issued summons. This notice being C.B.E. & C. Letter F. No. 208/122/89-CX6, dated 13-10-1989 stipulates as follows:
Complaints have been received from the trade that in some of the Collectorates summons under Section 14 of the Central Excises and Salt Act, 1944 are being issued to the Managing Directors and other high officers with a view to enforce recovery of dues which are under dispute. Action under this section is to be taken only as a last resort in cases where assessees are not cooperating or investigations are to be completed expeditiously. This section should not be used for harassing the top management for forcing them to pay up demands which are disputed by them. For recovery of demands normal procedure under the law should be followed.
If any instance of issue of summons to Managing Directors and other Directors without justification is noticed, a serious view will be taken by the Board. Collectors will be held personally responsible for enforcing these instructions in their charges.
5. I am of the opinion that this notice ought to be adhered to and directors and other high officers of the petitioner-company ought not to be unduly harassed. As regards recovery of service tax, if any, let no step be taken for coercing such payment but the respondent shall be at liberty to raise demand in accordance with law. The petitioner shall cooperate with the Revenue Authorities in this regard.
6. My attention has been drawn to an order passed by this Court in W.P. No. 1454 of 2001 in which this Court has directed that no penal action will be taken against the pet
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itioner and respondent No. 4 and in this order, a submission has been recorded by the learned Counsel for the Revenue Authority that they would not take any penal action at that moment. Mr. Roy Choudhury, however, submits that his clients have not taken any penal or coercive action in this matter. 7. Let urgent xerox certified copy of this order be supplied to the parties, if applied for, upon compliance with all requisite formalities.