Page 115 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] STATE BANK OF INDIA v. UNION OF INDIA 361
demand notice under Section 13(2) of the said Act and also took possession of 6th
respondent’s properties under Section 13(4) of the said Act on 19-2-2018. These
had been challenged by the 6th respondent in other forums.
8. The petitioner also filed on 13-4-2018 OA No. 223 of 2018 before the
Debt Recovery Tribunal, Hyderabad invoking the Recovery of Debts and Bank-
ruptcy Act,1993 for recovery of Rs. 280.68 Crores against the 6th respondent and
it is pending.
9. In the meantime the 6th respondent received an Income Tax Refund
Order for Rs. 35,75,95,400/- on 20-5-2019 and it was credited into the TRA ac-
count of the 6th respondent in the petitioner Bank at petitioner’s CCG Branch,
Hyderabad.
10. According to the petitioner, this amount, being a receivable, is sub-
ject the charge created by 6th respondent in its favour, and is entitled to be ad-
justed by it towards repayment of dues owed to it by the 6th respondent.
11. However the 3 respondent issued the impugned notice dated 11-6-
2019 to the Petitioner Bank invoking Section 87 of the Finance Act,1994 stating
that 6th respondent owes Rs. 59,20,19,079/- towards dues of Service Tax; invok-
ing Section 87(b)(i) r/w Section 73(1B) of the Finance Act,1994 it demanded that
the petitioner Bank pay forthwith the Income Tax refund amount to the credit of
the Central Government (i.e. the 1st respondent) by way of a demand draft
drawn in favour of “SBI Treasury Branch, Hyderabad for Service Tax payment”;
and if the amount falls short of Rs. 59,20,19,079/-, he directed the petitioner Bank
to subsequently transfer any amount becoming due from the petitioner to 6th
respondent or any other amount held by it for or on account of 6th respondent to
the extent of the shortfall to be paid to the 1st respondent. The 3rd respondent
also threatened to treat the petitioner as an ‘assessee in default’ otherwise.
12. A summons was also enclosed to the impugned notice under the
repealed Central Excise Act, 1944 r/w Section 174(2) of the CGST Act, 2017 ask-
ing the petitioner to appear before the 3rd respondent.
13. The Deputy General Manager of the petitioner appeared before the
3rd respondent and gave a statement contending that dues owed by 6th re-
spondent to petitioner are more than Rs. 2000 Crores, that it is a secured debt,
and the petitioner is entitled to adjust the Income Tax refund credited to 6th re-
spondent’s account in petitioner’s CCG Branch, Hyderabad towards its dues
pointing out it has got priority over claims of the respondents 1-3 under Section
31B of the Recovery of Debts and Bankruptcy Act, 1993.
14. Petitioner also contends that there was a claim lodged by the 5th re-
spondent with it under Section 8F of the Employees Provident Fund and Miscel-
laneous Provisions Act, 1952 for the same amount and that it is not possible to
pay it to the respondents 1-3.
15. Petitioner also contends that as per Section 88 of the Finance Act,
1994, the Service Tax and government dues have no priority over the secured
debts covered by the Recovery of Debts and Bankruptcy Act, 1993 and the
SARFAESI Act, 2002.
16. Petitioner further contends that it is not a party to the adjudication
proceedings against the 6th respondent taken by the respondents 1-3 and the
very issuance of the notice under Section 87(b)(i) of the Finance Act,1994 is with-
out jurisdiction and is arbitrary.
GST LAW TIMES  21st May 2020  115