By TIOL News Service

HYDERABAD, JULY 18, 2014: THE Petitioner challenges the notice of the Commissioner of Service Tax to the bank to recover an amount of Rs.28 ,56,464 /- allegedly payable by the bank to the petitioner.

The issue for decision by the High Court is whether Section 87 of the Finance Act, 1994 empowers the revenue authority to issue impugned notice intending to recover the amount.

The High Court observed,

On a close reading of the aforesaid Section, it appears it is one of the modes of recovery of the dues payable by debtor. The power given appears to be sweeping and wide in nature. This provision obliges the third party (here Bank) to pay not only when it becomes due and payable to the debtor, even also the same is being held by the third party, however with precondition that the money must be legally due and actually held. In this case when respondent Bank has not come forward to object to the action of Revenue, we do not see any reason fundamentally to stall the operation of the notice.

However, as the Revenue has agreed to hear the petitioner as to quantum of the legitimate amount of tax, we permit the petitioner to make a representation to the Revenue Officer who has issued the notice, within fortnight from the date of receipt of the copy of this order, failing which the notice in question shall be operative. If such representation is made it shall be disposed of with a speaking order, within three weeks from the date of making representation.

Till such decision is taken, operation of notice shall remain stayed, however the writ petitioner, and/or his representatives/agents/assigns are restrained from withdrawing any amount without leaving the balance of Rs.28 ,56,464 /-. The aforesaid restraint order will stand vacated if the writ petitioner furnishes bank guarantee in the same bank securing the aforesaid amount.

(See 2014-TIOL-1154-HC-AP-ST)