Recovery of any amount due to Central Government [Section 87] :

Central Excise Officer can recover any amount due under the service tax law by one or more of the modes mentioned below:—

(1) Amount not paid by a person under the service tax law may be set off against any money due to him by the Central Excise/Customs Department [Clause (a)]: Central Excise Officer may deduct or may require any other Central Excise Officer/Customs officer to deduct the amount so payable from any money owing to such person which may be under the control of the said Central Excise Officer/Customs officer.

(2) Recovery from any person other than from whom money is due if that other person holds money for/on account of the first person – Garnishee Proceedings [Clause (b)]:

(i) Issuance of the notice for recovery to any person other than from whom money is due: The Central Excise Officer may issue a written recovery notice to the following persons:

•  any person from whom money is due to such person
•  any person from whom money may become due to such person
•  any person who holds money for or on account of such person
•  any person who may subsequently hold money for or on account of such person.

The noticee would be required to pay to the credit of the Central Government so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount.

The money would be paid either forthwith upon the same becoming due or being held, or at or within the time specified in the notice. However, in no case the money would be required to be paid before it becomes due or is held.

(ii) Noticee bound to comply with the notice: Every person to whom a notice is issued under this clause shall be bound to comply with such notice. In case any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.

(iii) In case of failure to make the payment, the noticee deemed to be the assessee in default: If 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. Thus, all the consequences prescribed for assessees in default would apply for such other person as well.

(3) Detaining any immovable property belonging to/under the control of such person [Clause (c)]: Central Excise Officer may 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. However, such distrainment shall be made only with the authorisation of the Principal Commissioner/Commissioner of Central Excise and in accordance with the rules made in this behalf.

The said property may be sold by the Central Excise Officer if 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 30 days after such distress. The Central Excise Officer may satisfy the amount payable and the costs including unpaid cost of sale with the proceeds of such sale. The surplus amount, if any, shall be rendered to such person.

However, where the person (predecessor) from whom recovery is to be made

•  transfers/disposes of his business/trade in whole or in part, or
•  effects any change in the ownership thereof,

in consequence of which he is succeeded in such business or trade by any other person, then all goods, in the custody or possession of the successor may also be attached and sold for recovering the sums due from such predecessor at the time of such transfer/disposal or change. Such attachment and sale could however be effected only after obtaining written approval of Principal Commissioner/Commissioner of Central Excise.

(4) Collection of amount due as an arrear of land revenue [Clause (d)]: Central Excise Officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business. The said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue.

When more than one remedy are available for recovery of tax, all can be resorted to at the option of authorities recovering the amount, unless the statute in express words lays down that one remedy is to the exclusion of other [State of Kerala v. CM Francis and Co. (1961) 12 STC 119 (SC)].