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of <h1>Court quashes recovery notice, stresses completion of adjudication before actions.</h1> The court quashed the notice dated 11.08.2014 under Section 87 of the Finance Act, 1994, emphasizing the necessity of completing adjudication before ... Recovery of service tax u/s 87 without adjudication on the basis of raid - show cause notice issued later - more than admitted amount by this petitioner has been deposited - Held that:- Unless the proceeding under Section 73 of the Act is completed recovery notice under Section 87 could not have been issued by the respondents - Following decision of Technomaint Contractors Pvt. Ltd Vs. Union of India, as reported in [2014 (4) TMI 882 - GUJARAT HIGH COURT], R.V. Man Power Solution vs. Commr. of Cus. and Central Excise, as reported in [2013 (4) TMI 294 - UTTARAKHAND HIGH COURT] - Orders at Annexure 5 dated 11.08.2014 as well as order at Annexure 6 dated 01.09.2014 are hereby quashed and set aside as the respondents have already issued demand-cum-show cause notice under Section 73 (1) dated 17.10.2014, covering the disputed amount at ₹ 4,45,97,399/- is directed to be adjudicated upon as early as possible and practicable - Decide in favour of assessee. Issues:Challenge to order dated 11.08.2014 under Section 87 of the Finance Act, 1994 based on lack of adjudication; Validity of notice under Section 87 without prior notice under Section 73-A(3); Admissibility of liability towards service tax; Interpretation of statements recorded under Section 14 of the Excise Act; Reliance on judicial decisions from High Courts of Gujarat and Uttarakhand; Quashing of notice dated 11.08.2014 under Section 87.Issue 1: Challenge to order under Section 87 without adjudication:The petitioner contested the order dated 11.08.2014 under Section 87 of the Finance Act, 1994, arguing that the demanded amount was not based on any adjudication. The petitioner claimed that the amount was highly disputed, as evidenced by subsequent communications and calculations. The petitioner had already deposited a significant sum, challenging the validity of the recovery notice. The counsel contended that a notice under Section 87 cannot be issued without a prior notice under Section 73-A(3) of the Act, emphasizing the need for proper adjudication before recovery actions.Issue 2: Interpretation of statements under Section 14 of the Excise Act:The statements recorded under Section 14 of the Excise Act were pivotal in determining the petitioner's liability towards service tax. The court analyzed the responses provided during the recording of statements to ascertain the petitioner's admission or denial of the tax liability. Discrepancies in the calculations and subsequent communications were considered in evaluating the petitioner's position regarding the disputed amount. The court emphasized the importance of accurate documentation and detailed calculations in tax assessments.Issue 3: Reliance on judicial decisions and quashing of notice under Section 87:The petitioner's counsel cited relevant decisions from the High Courts of Gujarat and Uttarakhand to support the argument that recovery notices under Section 87 should be preceded by proper adjudication under Section 73 of the Act. The court, after considering the facts, circumstances, and legal precedents, quashed the notice dated 11.08.2014 under Section 87 of the Finance Act, 1994. The court highlighted the necessity of completing the adjudication process before initiating recovery actions, as established in the cited judicial pronouncements.In a detailed analysis, the court scrutinized the petitioner's challenge to the order under Section 87, emphasizing the lack of adjudication and the disputed nature of the demanded amount. The interpretation of statements recorded under Section 14 of the Excise Act played a crucial role in determining the petitioner's liability towards service tax. By relying on judicial decisions from the High Courts of Gujarat and Uttarakhand, the court reinforced the requirement for proper adjudication before recovery notices under Section 87 could be issued. Ultimately, the court quashed the notice dated 11.08.2014 under Section 87, directing the adjudication of the disputed amount covered in the demand-cum-show cause notice issued by the respondents.
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