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December 2015

Recovery u/s. 87 of the Finance Act, 1994 can be resorted to only after an amount is adjudicated to be due to the Central Government.

By Puloma Dalal
Jayesh Gogri
Mandar Telang
Reading Time 1 mins
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37. [2015-TIOL-2451-HC-AHM-ST] Gopala Builders vs. Directorate General of Central Excise Intelligence.

Recovery u/s. 87 of the Finance Act, 1994 can be resorted to only after an amount is adjudicated to be due to the Central Government.

Facts

Search operations were carried out at the Appellant’s premises. Several irregularities were noticed in the payment of service tax. Additional amounts were paid in the course of investigation. Subsequently notices were issued u/s. 87 of the Finance Act, 1994 to their debtors with a direction that monies payable to the Appellant be deposited in the Government treasury. Thereafter a Show Cause Notice was issued. Since notices were issued to their debtors for an amount determined unilaterally without issuance of Show Cause Notice, the present writ is filed.

Held

The Hon’ble High Court relying on the decision of the Uttarakhand High Court in the case of R.V. Man Power Solution vs. Commissioner of Customs and Central Excise [2014-69-VST-528] held that recovery u/s. 87 of the Finance Act, 1994 can be resorted to only after an amount is adjudicated to be due to the Central Government. Therefore, such drastic measures adopted

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