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RECOVERY OF SERVICE TAX UNDER SECTION 87 OF FINANCE ACT,1994

Service Tax - By: - Mr. M. GOVINDARAJAN - Dated:- 18-6-2015 - Section 87 was inserted by the Finance Act, 2006 with effect from 18.04.2006. Section 87 prescribes the procedure for the recovery of amount due to the Central Government. The words amount due may be, in the context of Finance Act, 1994, as service tax due. Section 87 provides that where any amount payable by a person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made there under i .....

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or erroneously refunded within eighteen months from the relevant date. The eighteen months period may be extended, if the non levy or nonpayment of service tax is with the intention to evade payment of service tax , to five years. The assessee is required to give reply to the show cause notice. The Central Excise Officer may, after considering the submissions made by the assessee, determine the service tax from such person. Thus before taking action under Section 87 the service tax liability is .....

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k Limited V. Union of India - 2015 (5) TMI 300 - BOMBAY HIGH COURT the Revenue coerced the assessee to pay service on threat of taking action under Section 87 of the Act which can have drastic consequences such as sealing, attaching accounts of bank etc., and when an assessee succumbs to the said pressure and deposits the same under protect the argument of the Revenue that since the payment is made the provision of Section 73 cannot be invoked. The High Court held that if it is the view of the R .....

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ch the petitioners have raised their objections, recoveries in that adjudication of such disputed taxes were simply not permissible in law. Section 73C allows the department to make provisional attachment of the properties of the assessee during the pendency of the proceedings under Section 73 of the Act for the purpose of protecting the interest of the Revenue. Such provisions cannot be activated for seeking recovery even before adjudication. Recovery of unpaid tax is to be made as per Section .....

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) provides that the Central Excise Officer may, by notice in writing, require 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 either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due fro .....

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is made, notwithstanding any rule, practice or requirement to the contrary. Section 87 (b) (iii) provides that in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and all the consequences of this Chapter shall follow. By virtue of Section 87 the Department freezed the bank accounts of the assessees. This sec .....

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that the Central Excise Officer may, on an authorization by the Principal Commissioner of Central Excise or Commissioner of Central Excise, in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after a .....

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