Assessee challenged the recovery threats of the service tax department to recover the service tax and arrest the responsible officers for non-payment without following the procedure of issuing show cause notice and adjudicating the dues.
In this background, the High Court held that any recovery by coercive measures is straightway impermissible unless the investigation results into issuance of a show cause notice, an opportunity to the Petitioner to resist the demand, adjudication thereof by reasoned order and protective remedies such as appeals.
Further, Court also held that the Petitioners do not dispute the department’s right to investigate in accordance with law. The petitioners have already attended the office of the covered Respondents and once the statement of the Petitioners was recorded goes without saying that on further summons being issued and on called upon to attend the Officers of the Respondents, they will attend and co-operate in these investigations by producing all the documents and answering the requisite queries, subject, of course, to their rights in law. It is only when these investigations, conclude that the authorities would be in a position to take a decision whether to launch any prosecution. Without completing the process of investigation, no arrest could be permissible.