Recovery under Section 87 requires final adjudication; bank accounts cannot be frozen before service tax liability is quantified.

Section 87 of the Finance Act, 1994 was held to be a recovery provision that can operate only after service tax liability has been finally adjudicated and quantified; a tentative demand in a show cause notice was insufficient. The court further read the provision as not authorising freezing of bank accounts before determination of the amount payable, but only permitting recovery from a person holding money for the assessee after liability is established. On that basis, the freezing of the petitioner's bank accounts was held without jurisdiction and unsustainable, and the impugned order was set aside.

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Issues: Whether the authority could freeze the petitioner's bank accounts under Section 87 of the Finance Act, 1994 before final adjudication and quantification of the service tax demand.

Analysis: The demand in the show cause notice had not yet been finally adjudicated, and the amount mentioned therein was only tentative. Section 87 of the Finance Act, 1994 was held to be a recovery provision applicable only after the amount payable has been adjudged and quantified. The provision was also read as not conferring power to freeze bank accounts; at most, it permits recovery from a person holding money for the assessee after liability has been determined.

Conclusion: The freezing of the petitioner's bank accounts was jurisdiction and not sustainable in law, and the impugned order was set aside. The petitioner was required to file a reply and the authority was left free to proceed afresh in accordance with law after adjudication.

Ratio Decidendi: Section 87 of the Finance Act, 1994 can be invoked only for recovery of an amount finally determined as payable, and it does not authorize freezing of bank accounts before adjudication.

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