2016 (7) TMI 131 - HC - Service Tax

Recovery of tax u/s 87 from successor of deceased proprietor - SCN was issued to the deceased but could not be adjudicated during his life time - garnishee notices - Validity of decision of learned Single Judge of this Court quashing the recovery notice - Held that - we are not impressed by the submission of the learned Counsel for the appellants that the power under Section 87 of the Finance Act is independent and irrespective of the procedure under Section 73 nor can we accept the contention that when the power under Section 87 of the Finance Act is to be invoked, no procedure under Section 73 is to be undertaken. If we entertain the contention, the resultant situation would be that the power under Section 87 of the Finance Act would be without an adjudication mechanism under Section 73 of the Finance Act which is neither conceived by the legislature nor can be the accepted position. In view of the above, read with the reasons recorded by the learned Single Judge, we do not find any case made out for interference. - Decided against the Revenue.

Summary

Issues:
Interpretation of Sections 73 and 87 of the Finance Act, 1994.

Analysis:
The judgment in question pertains to appeals against an order quashing a recovery notice and allowing a petition. The main contention raised was regarding the procedure under Sections 73 and 87 of the Finance Act, 1994. The appellants argued that these sections are independent, and if the service tax amount is already recovered from the customer, Section 87 could be invoked directly without resorting to Section 73. On the other hand, the respondent contended that until the matter is finalized under Section 73, Section 87 cannot be invoked. The Court noted that Section 73 covers the recovery of service tax not paid to the Government, including cases where the tax is collected but not remitted. Section 87, on the other hand, deals with the recovery of amounts due to the Central Government. The Court emphasized that both sections need to be read together, with Section 73 covering adjudication and Section 87 for recovery. The judgment concluded that the power under Section 87 is not independent of Section 73, and both procedures must be followed before recovery. Therefore, the appeals were dismissed as no interference was warranted based on the reasons recorded by the Single Judge.

In summary, the judgment provides a detailed analysis of the interpretation of Sections 73 and 87 of the Finance Act, 1994. It clarifies that the power under Section 87 cannot be invoked independently of the adjudication mechanism under Section 73. The Court emphasized the need to follow both procedures before effecting recovery, ensuring a comprehensive understanding of the legal provisions involved in the case.