section 87(b)(ii)

[sunil kumar]

how can deptt take action against parties under section 87(b)(ii) those who are defaulters and not deposit duty

[KASTURI SETHI]

Section 87(b)(ii) pertains to Finance Act, 1994 and not to Central Excise. Under Section 87 the due amount of Service Tax can be recovered without issue of show cause notice, if the assessee has himself declared the said amount due in ST-3 return but could not deposit by any reason, whatsoever may be.

Secondly, suppose A is defaulter and B owes money to A. Govt. can recover the Govt. dues pending against A from B after issuing notice. B will be bound to comply with the notice. This 'B' may be bank, post office, insurance co. or any other person. As per sub-section (b)(ii) of Section 87, every person to whom such notice is served includes post office, bank or insurance etc and shall be bound to comply with such notice notwithstanding their own rules, regulations, practice and procedures. In other words, rules, regulations, procedures, practices of bank, post office, insurance etc. cannot be a hurdle in recovering the Govt. dues from these departments.For the purpose of recovery of Govt. dues, the above departments' rules, regulations, norms, practices, procedures will be relegated to the background. In a nutshell, the Service Tax department will be at liberty to recover the arrears of Govt. dues pending against A from these departments who owe money to A person.

[KASTURI SETHI]

In continuation of my reply dated 22.8.19, to be simpler, Govt. has vast power vested in Section 87 and as per Section 87 (b)(ii), Govt. can also withdraw the amount of Govt. dues from defaulter's account maintained in Post Office, Bank, Insurance Co. etc. and these departments will have to comply with without adhering to their rules and regulations and procedures for the purpose of helping the Govt. in recovery of arrears of revenue.

AI Summary

Recovery of service tax dues permits direct attachment of amounts held by banks and post offices despite their internal rules. Section 87(b)(ii) permits recovery of service tax arrears declared by an assessee in its return but not deposited, by issuing notice to third parties who owe money to the defaulter; banks, post offices, insurance companies and similar entities must comply with such notices notwithstanding their own rules and procedures, allowing direct withdrawal or appropriation of amounts payable to the defaulter for recovery of Government dues.