Installment-based recovery of service tax arrears may be adjusted to match the assessee's financial capacity and liability.

Recovery of service tax arrears through garnishee proceedings was addressed by modifying the instalment schedule under the departmental circular. The assessee did not dispute the liability or its quantum and sought only a more workable payment plan. The Court accepted that the circular permitted instalments and found that five instalments were inadequate in light of the assessee's financial inability to clear the outstanding tax and interest. The earlier instalment arrangement was therefore revised, and twelve instalments were allowed, with the initial amount to be deducted from the bank account and the balance payable in equal monthly instalments.

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Issues: Whether the appellant was entitled to a larger instalment facility for clearing the service tax arrears recovered through garnishee proceedings.

Analysis: The appellant did not dispute the tax liability or its quantum and sought only a more liberal payment schedule under the departmental circular governing instalments for recovery of arrears. The Court noted that the circular permitted grant of instalments and that the appellant's financial inability made five instalments inadequate for clearing the outstanding service tax and interest. In these circumstances, the instalment arrangement fixed by the Single Judge was found liable to be modified.

Conclusion: The appellant was granted twelve instalments instead of five, with the initial amount to be deducted from the bank account as directed and the balance to be paid in twelve equal instalments from 1 February 2024.

Ratio Decidendi: Where recovery circulars permit instalment-based clearance of arrears, the Court may grant a more workable instalment schedule having regard to the assessee's financial capacity and the outstanding liability.

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