Page 113 - GSTL_2nd July 2020 _Vol 38_Part 1

2020 ]S. KUMAR’S ASSOCIATES v. ADDL. COMMR. (PREV.) OF CUS., C. EX. & S.T., BILASPUR 31
“18. Regard being had to the scheme of the Finance Act, 1994 it does not
leave any doubt in the mind of this Court that until and unless there is no
determination and adjudication either under Section 72 or under Section 73
of the Act, respondents-2 to 4 cannot resort to invoke Section 87 of the Fi-
nance Act. When there is no adjudication order and undisputedly and con-
cededly in the instant case, respondent No. 4 having issued a show cause
notice to the service provider M/s Rapid Marine Suppliers as contemplated
under Section 73(1) of the Act for adjudicating the show cause notice by
calling upon the service provider to show cause as to why the amounts as
indicated in the show cause notice should not be recovered from it, has
simultaneously proceeded to issue recovery notice to respondents 6 and 7
by calling upon them to remit the amounts held by them on behalf of the
service provider.
19. ...This Court is of the considered view that power vested under Section
87(b)(i) & (ii) of the Finance Act, 1994 can be exercised only after adjudica-
tion of the show cause notice is concluded. In other words, resort to Section
87 of the Finance Act, 1994 can be had for recovering the amounts deter-
mined to be due from the service provider and not prior to that...”
7. Likewise, the Gujarat High Court in the matter of Gopala Builders v.
Directorate General of Central Excise Intelligence, decided on 1-10-2015 in Special
Civil Application No. 8704 of 2015 [2015 (40) S.T.R. 888 (Guj.)], in paragraph 10,
11 & 12, has held as follows :
“10. From the facts noted hereinabove, it is evident that the proceedings
initiated against the petitioner, post the search operations, are still at the
stage of show cause notice. Therefore, there is no final adjudication in re-
spect of the service tax liability of the petitioner. The respondents, however,
have unilaterally worked out such liability for the period in question at Rs.
4,25,74,611/-. Thereafter, no demand for such amount has been made from
the petitioner by issuing any demand notice in this regard. However, the
respondents have resorted to the drastic measure of issuing notices under
Section 87 of the Act to the debtors of the petitioner. Section 87 of the Fi-
nance Act, 1994 provides for recovery of any amount due to Central Gov-
ernment and lays down that where any amount payable by a person to the
credit of the Central Government under any of the provisions of that Chap-
ter or the rules made thereunder is not paid, the Central Excise Officer shall
proceed to recover the amount by one or more of the modes mentioned
therein. Section 87 of the Finance Act, 1994 came up for consideration be-
fore the Jharkhand High Court in the case of Exam Security Services Pvt. Ltd.
v. Union of India, 2015 SCC Online Jhar 350, wherein the Court reiterated the
view expressed by the Uttarakhand High Court in the case of R.V. Man
Power Solution v. Commissioner of Customs and Central Excise, (2014) 69 VST
528, wherein it has been observed that going by the language of section 87
of the Finance Act, any amount payable means the amount adjudicated af-
ter hearing the show cause notice and this provision of Section 87 is one of
the methods of recovery of the amount due and payable after adjudication
is done. Such claim can be made only when the final adjudication has been
done after quantifying the amount due and payable by the assessee.
11. This Court is in agreement with the aforesaid view expressed by the
Uttarakhand High Court, namely, that recovery under Section 87 of the Fi-
nance Act can be resorted to only after an amount is adjudicated to be due
to the Central Government. Under the circumstances, at the stage of show
GST LAW TIMES  2nd July 2020  113