On 29 April, 2015, The High Court of Karnataka at Bengaluru in the case of Mrs. Prashanti Vs. Union of India, Vide No. 2015-TIOL-1596-HC-KAR-ST dated 29 April, 2015, held that the recovery notices issued even before the adjudication of the Show Cause Notice are liable to be quashed.
As per the judgment given, the words "amount payable by a person" used in Section 87 will have to be considered in the background of Section 73 of the Act inasmuch as, show cause notice issued under Section 73(1) of the Act is required to be adjudicated after considering representation of the person if filed and thereafter determine the amount payable. Thus, jurisdictional Central Excise Officer would be entitled to recover the amount from the person payable and payable would by such person after adjudication has been done as otherwise, it would amount to putting the cart before horse.
Regard being had to the scheme of the Finance Act, 1994 it does not leave any doubts that until and unless there is determination and adjudication either under Section 72 or under Section 73 of the Act, respondents cannot resort to invoke Section 87 of the Finance Act.
Impugned notices under Section 87 are illegal and quashed Respondents directed to remit the amounts recovered back in respective accounts.
Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
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