Court upholds Garnishee order for Service Tax recovery under Finance Act, 1994. Section 87 procedures followed.

The Court dismissed the writ petition challenging the Notice for recovery of Service Tax under Section 87 of the Finance Act, 1994. The Garnishee order freezing the petitioner's bank account was deemed valid, as Section 87 procedures for recovery were followed without the need for prior notice. The Court upheld the legality of the Garnishee proceedings, as the Service Tax liability had not been set aside or stayed by any higher authority. Therefore, the Court ruled in favor of the Central Government for the recovery of Service Tax dues from the petitioner, dismissing the petition without costs.

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Issues:
Challenge to Notice for recovery of Service Tax under Section 87 of the Finance Act of 1994; Validity of Garnishee order/Notice under Section 87; Compliance with due procedure under Section 73 of the Finance Act, 1994; Applicability of Garnishee proceedings under Section 87; Legality of Garnishee proceedings for recovery of Service Tax dues.

Analysis:
The petitioner challenged a Notice for recovery of Service Tax under Section 87 of the Finance Act of 1994, seeking to recover a substantial sum towards Service Tax Liability with interest and penalty. The Garnishee order/Notice was addressed to the Banker of the petitioner, freezing the petitioner's Current Account. The petitioner contended that the Assessing Authority did not follow due procedure by not issuing a notice under Section 73 of the Finance Act, 1994. The petitioner argued that without proper notice, the Banker should not have been directed to remit the amount against the arrears of Service Tax Liability. The petitioner also highlighted a pending matter related to the demand of Service Tax, which was subject to another writ petition before the Court.

The Court noted that the present writ petition lacked merit and deserved dismissal. The Court clarified that the impugned Garnishee order/Notice was under Section 87 of the Service Tax Chapter, not Section 73 of the Finance Act, 1994. The Court emphasized the provisions of Section 87 for recovery of amounts due to the Central Government, outlining the procedures and obligations of third parties holding money for defaulting assessees. The Court rejected the petitioner's argument that prior notice was required, stating that such Garnishee proceedings did not necessitate advance notice to the defaulting assessee.

It was established that the Service Tax Liability determined against the petitioner had not been set aside or stayed by any higher authority, court, or tribunal. Therefore, the liability to pay the Service Tax to the Central Government was not restricted, and the Garnishee proceedings under Section 87 were deemed legal. The Court concluded that the impugned Garnishee proceedings were in accordance with the law for the recovery of Service Tax dues from the petitioner. Consequently, the Court dismissed the writ petition, finding no merit in the petitioner's contentions and ruled against awarding costs.

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