TaxTMI 
TaxTMI 
2020 (10) TMI 59
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....tendra B. Mishra, learned counsel for the Respondents. 4] According to the Petitioner, it is a private limited company engaged in the business of construction works and related contracts. It was registered as a service provider under the Finance Act, 1994. 5] It is stated that for non-realization of legitimate contractual dues Petitioner was not able to discharge its service tax liability for the period from 01.04.2015 to 30.06.2017 in respect of which two Writ Petitions are pending before this Court. As a result, summons were issued to the Petitioner in connection with service tax liability whereafter department took the view that an amount of Rs. 94,26,823.00 was required to be paid by the Petitioner on account of service tax for the said period. In this connection, statements of Shri. Sanjay P. Ahire, Accountant of the Petitioner and Shri. Kishan Chand Agrawal, Legal Consultant were recorded on 19.12.2019. Further statement of Shri. Salekchand Agrawal, director of the Petitioner was recorded on 13.02.2020. 6] In the meanwhile, the Central Government introduced Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. In terms of the said scheme, Petitioner made a declarat....
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....ion on 13.02.2020 whereafter he deposed that Petitioner would pay the amount of Rs. 94,26,823.00 at the earliest. It is contended that such declaration amounted to admission of liability which is recoverable under Section 87 of the Finance Act, 1994. The bank account was frozen under Section 87 of the Finance Act, 1994 to safeguard the interest of revenue. It is reiterated that Petitioner has accepted its service tax liability of Rs. 94,26,823.00 for the period 01.04.2015 to 30.06.2017 whereafter garnishee notice was issued. That apart, it is contended that Petitioner has not challenged rejection of its claim under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. 12] Mr. Bharat Raichandani, learned counsel for the Petitioner has submitted that no liability on behalf of the Petitioner has crystallized. No amount which has to be construed as due from the Petitioner has been adjudicated upon and determined. Mere statements of officials of the Petitioner cannot be construed as determined liability of the Petitioner. There has to be adjudication in this regard whereafter the amount due has to be determined. Only after determination of the due amount and failure of the Peti....
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....020, it can be deduced that on the basis of the said order, bank account of the Petitioner has been frozen. 17] We have already noted the stand of the Respondents. Respondents contend that the aforesaid amount has been admitted as a service tax liability by the Petitioner but not paid. Therefore recourse has been taken to Section 87 of the Finance Act, 1994 which is fully justified. 18] At this stage, we may examine the joint statement made by the Accountant, Shri. Sanjay P. Ahire and Legal Consultant, Shri. Kishan Chand Agrawal, which was recorded on 19.12.2019. As per question 10, it was put across to the said two persons that it prima facie appeared that Petitioner had not paid service tax on income received on works contract service for the period 2015-16 to 2016-17(upto June 2017) on the income shown in the financials for the said period; a tabular chart was presented, wherefrom it was pointed out that service tax for an amount of Rs. 94,26,823.00 was due. Answer given to this was that they admitted the aforesaid amount of service tax payable for the period under consideration with interest and penalty but it was also stated they would have to check with their books and ....
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.... to recover". A notice under Section 87(b)(i) is in the form of a garnishee notice. It is in that context that the above three expressions would have to be understood and applied. The three expressions have to be read in conjunction. If read in conjunction, it would mean the following :- i) some amount of service tax is payable by a person to the credit of the central government; ii) that amount is not paid; iii) then Central Excise Officer shall proceed to recover that amount. 21] In other words, before proceeding to recover the amount by issuing garnishee notice under Section 87(b)(i), the amount has to be first determined and quantified and thereafter not paid by the person required to make the payment as per law. Thus the garnishee notice has to be preceded by determination of the amount due and not paid. The amount payable has to first crystallize. 22] In Lawson Tours and Travels (India) P. Ltd. Vs. Dy. Director, 2015(317) E.L.T. 248, a division bench of this Court was examining the grievance of the Petitioner that its bank account was attached although no adjudication order was passed by the revenue. In that case, it was noted that though a sh....
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....show cause notice, an opportunity to the Petitioner to resist the demand, an adjudication thereof by a reasoned order and protective remedies such as appeals. It was held that any recovery straightway by coercive measures is not permissible. 22.4] Finally, in M. P. Enterprises (supra), the challenge was to a notice issued under Section 87(b)(i) of the Finance Act, 1994 attaching the bank account of the Petitioner for recovery of service tax payable. In that context, this Court held that till the amount due is adjudicated, question of initiating coercive proceeding for recovery cannot arise. There has to be adjudication whereafter the amount of service tax required to be paid has to be determined. Prior to determination of the amount due, invocation of Section 87 would be premature. It was held that Section 87 provides that only after the amount payable by an assessee to the Government has been determined and on such determination, the assessee does not make payment due to the Central Government that Section 87 can be invoked. In that case, it was found that no amount was determined as payable by an adjudication order. 23] Reverting back to the facts of the present case, we no....