Page 114 - GSTL_2nd July 2020 _Vol 38_Part 1

32 GST LAW TIMES [ Vol. 38
cause notice when the liability of the petitioner is yet to be crystallized, it
was not permissible for the respondents to resort to the drastic provisions
of section 87 of the Act.
12 Besides, as the facts reveal, no demand notice in respect of the afore-
said amount had been issued to the petitioner and directly garnishee orders
had been issued to the clients of the petitioner. Such course of action adopt-
ed by the respondents, evidently, would bring the petitioner to disrepute
and spoil its reputation in the business. Therefore, the action of the re-
spondents of resorting to the provisions of section 87 of the Act was not
warranted in the facts and circumstances of the case. The impugned notices,
Annexure “E” collectively to the petition, being contrary to the provisions
of section 87 of the Act, therefore, cannot be sustained.”
8. Further, in the case of ICICI Bank Limited v. The Union of India & Oth-
ers, 2015 SCC Online Bom 4875 = 2015 (38) S.T.R. 907 (Bom.), the Division Bench
of the Bombay High Court has held as under :
“44. We are of the considered view that the amount which is payable by a
person can be said to be payable only after, there is determination as pro-
vided under Section 72 or Section 73 of the said Act. We find that neither of
that has been done.”
9. On perusal of the aforesaid judicial pronouncements, it would be ev-
idently clear that before initiating proceeding under Section 87, the authorities
ought to have initiated appropriate assessment proceeding and determination of
the amount payable by the establishment and a demand notice also needs to be
issued and only in the event of the demand notice not being satisfied, the pro-
ceedings under Section 87 can be initiated. In the instant case, when we look at
the reply submitted by the Respondents, we do not find any such adjudication
done under Section 73 of the Act. Neither from the reply nor from the submis-
sions made by the Respondents, do we find any demand notice being raised
against the Petitioners at any point of time and it is only the garnishee notices
and a freezing order straightaway issued, Annexure P-1 to the management of
SECL and Annexure P-2 to the Union Bank of India.
10. For the foregoing reasons, this Court has no hesitation in reaching
to the conclusion that the garnishee notices issued to the SECL and Union Bank
of India were totally uncalled for and the authorities ought not to have issued
such notices before a final determination is done. Thus, Annexures P-1 and P-2 at
this juncture deserve to be and are set aside/quashed. Since the Petitioners sub-
mit that to the show cause notice, dated 21-10-2016, they have now filed a de-
tailed reply on 12-5-2017 and since no adjudication has been done, it is expected
that the Respondents shall finalize the proceeding drawn on the show cause no-
tice dated 21-10-2016 and thereafter determine the amount payable by the Peti-
tioners and then issue appropriate demand notice in accordance with law appli-
cable and only in the event of a failure to satisfy the demand notice, should the
Respondents initiate the proceeding under Section 87 of the Act. Thus, the two
orders, Annexures P-1 and P-2, as a consequence get quashed.
11. The present writ petition is allowed and disposed off. No order as
to costs.

_______

GST LAW TIMES  2nd July 2020  114