Recovery under the service tax compliance scheme requires proper adjudication and notice before enforcement.

A recovery notice issued after an order under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 was questioned on the ground that no adjudication order had been passed under the Finance Act, 1994. The Court recorded a prima facie view that, if the assessee was found ineligible for the scheme, recovery could not be made without following the procedure prescribed under the Finance Act, 1994 and issuing a proper notice. In the absence of an adjudication order, the recovery notice was treated as prima facie without jurisdiction and was stayed, while the Revenue was left free to proceed in accordance with law.

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Issues: Whether the recovery notice issued consequent to the order under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 could be sustained in the absence of an adjudication order under the Finance Act, 1994.

Analysis: The notice sought recovery of interest as a consequence of the order passed under the scheme. The Court recorded a prima facie view that, if the assessee was found not entitled to the scheme, the Revenue could not recover amounts under the scheme without following the procedure prescribed under the Finance Act, 1994 and issuing a proper notice. In the absence of an adjudication order, the recovery notice was prima facie without jurisdiction.

Conclusion: The recovery notice was stayed till final disposal of the petition, and the Revenue was left free to initiate recovery in accordance with law under the Finance Act, 1994.

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