Voluntary compliance scheme protection keeps coercive recovery in abeyance until the authority decides the application.

When a statutory voluntary compliance scheme is invoked and the application is prima facie maintainable, coercive recovery under section 87 should be kept in abeyance until the competent authority decides the application. The court found that the petitioner had shown the conditions for consideration under sections 106 and 107 of the Finance Act, 1994, and that allowing recovery or garnishee action before disposal would defeat the scheme's purpose. Recovery proceedings were therefore suspended pending decision on the application, and the authority was directed to decide it within 60 days.

---

---

Issues: Whether recovery proceedings under section 87 could continue when the petitioner had already applied under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 and the application had not yet been decided.

Analysis: The petitioner had prima facie shown that the conditions of sections 106 and 107 of the Finance Act, 1994, as amended, were attracted. The object of the scheme would be undermined if coercive recovery were allowed to proceed before the competent authority examined and decided the application. In these circumstances, the recovery notice and consequential garnishee action were required to be kept in abeyance until the application was decided.

Conclusion: Recovery proceedings were suspended pending disposal of the petitioner's application under the scheme, and the competent authority was directed to decide the application within 60 days.

Ratio Decidendi: Where a statutory voluntary compliance scheme is invoked and the application is prima facie maintainable, coercive recovery should remain stayed until the competent authority decides the application, so that the scheme is not rendered otiose.

---