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TMI Blog2020 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be understood and applied - thus, 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. In the present case, Respondents are relying on two statements made by officials of the Petitioner; one on 19.12.2019 and the other on 13.02.2020. Mere making of such statements by themselves cannot lead to any conclusion that certain amount has been determined as due from the Petitioner. Finance Act, 1994 provides for various provisions for making assessment for determining the amount of service tax required to be paid by the service provider, including best judgment assessment under Section 72 which provision can be invoked when there is failure to furnish the return or failure to assess the tax. Without there being an assessment, no conclusion can be reached that any amount has become due to be paid. In the absence of such determination of the tax due, recourse to Section 87 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment introduced Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. In terms of the said scheme, Petitioner made a declaration on 26.12.2019 making a voluntary declaration that an amount of ₹ 92,13,450.00 was the amount of service tax due for the period 2015-2017. However, by email dated 29.01.2020 Respondent No.4 rejected such application of the Petitioner. 7] Following rejection of application of the Petitioner under the aforesaid scheme, Respondent No.3 issued letters dated 03.01.2020 and 31.01.2020 seeking to reopen inquiry proceedings against the Petitioner. In this connection, summons dated 07.02.2020 were issued under Section 70 of the Central Goods and Services Tax Act, 2017. As part of the inquiry, statement of Shri. Salekchand Agrawal was recorded. 8] On 16.03.2020, a letter was issued to the Petitioner by the Chief Manager of State Bank of India, Madam Cama Road, State Bank Bhavan, Mumbai ( State Bank of India for short hereinafter) informing that State Bank of India was advised to hold on the account of the Petitioner as hold of ₹ 94,26,823,00 has been applied to its account No.11234470208 as per order received from the Central Goods and Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication in this regard whereafter the amount due has to be determined. Only after determination of the due amount and failure of the Petitioner to pay the due amount that garnishee proceedings can be initiated by taking recourse to the provisions of Section 87 of the Finance Act, 1994. In support of his submissions, learned counsel for the Petitioner has placed reliance on three decisions of this Court, namely, Ramchandra A. Patankar Vs. Union of India (Writ Petition No.1151 of 2019), Sampark Marketing Advertising Solutions Pvt. Ltd. Vs. Union of India (Writ Petition No.2195 of 2018) and M. P. Enterprises Vs. Union of India (Writ Petition No.10085 of 2018). 13] On the other hand, Mr. Pradeep Jetly, learned senior counsel for the Respondents submits that there is clear admission of liability on the part of the Petitioner. When representatives of the Petitioner themselves had admitted the liability whereafter Petitioner failed to pay the admitted liability, it is a clear case where Section 87 of the Finance Act, 1994 would be attracted. Case laws relied upon by learned counsel for the Petitioner are clearly distinguishable and therefore those would not be applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for the period under consideration with interest and penalty but it was also stated they would have to check with their books and thereafter a decision would be taken by the management. Assurance was given that the amount would be paid shortly. 18.1] In so far the statement of Shri. Salekchand Agrawal, director of the Petitioner, recorded on 13.02.2020 is concerned, in respect of question 5 whereby he was asked that prima facie the ascertained amount of service tax of ₹ 94,26,823/- has still not been paid by the Petitioner. The answer given was that Petitioner was verifying the records and would try to pay the said amount at the earliest. 19] Having noted the above, we may now advert to Section 87 of the Finance Act, 1994. It is not disputed that clause (b)(i) of Section 87 is the relevant provision in so far the present case is concerned. Relevant portion of Section 87 is extracted hereunder :- SECTION 262[87 Recovery of any amount due to Central Government. - Where any amount payable by a person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made thereunder is not paid, the Central Excise Officer shall p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was attached although no adjudication order was passed by the revenue. In that case, it was noted that though a show cause notice was issued, no adjudication proceedings had commenced or had been completed. It was pending the adjudication process that the coercive measure was adopted. In that context this Court observed that there was no reason for the authority to hastily freeze and attach the bank account. If the Petitioner had a huge liability as was contended by the revenue, the least that was expected was that the competent authority should have decided the adjudication proceedings and should have passed appropriate order. It was only thereafter that the dues could be said to have been crystallized and adjudicated. 22.1] Again in ICICI Bank Limited Vs. Union of India, 2015(28) S.T.R. 907, a division bench of this Court examined the question as to whether without there being any adjudication as provided under Chapter 5 of the Finance Act, 1994, coercive steps could be taken by the revenue for recovery of service tax or penalty or interest. After elaborately examining various provisions contained in Chapter 5 of the Finance Act, 1994 and after referring to several deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no amount was determined as payable by an adjudication order. 23] Reverting back to the facts of the present case, we notice that Respondents are relying on two statements made by officials of the Petitioner; one on 19.12.2019 and the other on 13.02.2020. Mere making of such statements by themselves cannot lead to any conclusion that certain amount has been determined as due from the Petitioner. Finance Act, 1994 provides for various provisions for making assessment for determining the amount of service tax required to be paid by the service provider, including best judgment assessment under Section 72 which provision can be invoked when there is failure to furnish the return or failure to assess the tax. Without there being an assessment, no conclusion can be reached that any amount has become due to be paid. In the absence of such determination of the tax due, recourse to Section 87 of the Finance Act, 1994 would certainly be premature and cannot be justified. 24] Consequently and having regard to the discussions made above, we direct the Respondents to forthwith withdraw the restraint on the Petitioner s bank account so that Petitioner s account bearing account No.112 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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