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2020 (10) TMI 59 - HC - Service TaxViolation of Principles of Natural Justice - freezing of Bank Account of petitioner - contention of the Petitioner is that no show-cause notice was issued under Section 73 or 73A of the Finance Act, 1994 to the Petitioner and also noo assessment order has been passed before freezing the bank account of the Petitioner - HELD THAT:- Where any amount payable by a person to the credit of the Central Government under service tax is not paid, the Central Excise Officer may recover the amount by issuing notice in writing requiring any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government. An analysis of the above provision would reveal that the crucial expressions to be noticed are “any amount payable”, “is not paid” and “shall proceed to recover”. A notice under Section 87(b)(i) is in the form of a garnishee notice. It is in that context that the above three expressions would 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 the Finance Act, 1994 would certainly be premature and cannot be justified. The Respondents are directed to forthwith withdraw the restraint on the Petitioner’s bank account so that Petitioner’s account with the State Bank of India, Madam Cama Road, State Bank Bhavan, Mumbai can be made functional for the Petitioner - petition allowed - decided in favor of petitioner.
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