2014 (12) TMI 415 - HC - Service Tax

Application to deposit remaining 50% of the amount under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 - declaration made under Section 106 - by virtue of issuance of summon dated 26/28.02.2013, inquiry or investigation, was already initiated before 01.03.2013 - whether the case of the petitioner falls under Sub section (2) of Section 106 of the Finance Act - Held that - summons were issued on 26 and 28.2.2013. Mere fact that summons were served after 01.03.2013 shall be of no consequence. Thus the first condition of Section 106(2) that such an inquiry or the investigation was initiated before 1.3.2013 was satisfied. The later condition of such an inquiry or the investigation being still pending as on 01.03.2013 was also satisfied. The designated authority was justified in rejecting the declaration of the petitioner. Equally, merely because the petitioner filed a declaration and summons along with such declaration would not compel the department to accept the same de hors to the provisions of the scheme. Merely filing of the declaration and disclosure of issuance of summons before 01.03.2013 do not give any vested right to the petitioner that such a declaration must be accepted irrespective of the provisions of the scheme. - Decided against appellant.

Issues Involved:
1. Eligibility of the petitioner to make a declaration under the Service Tax Voluntary Compliance Encouragement Scheme, 2013.
2. Interpretation of the initiation of inquiry or investigation under Section 106(2) of the Finance Act, 2013.
3. Application of Section 37C of the Central Excise Act, 1944, regarding service of summons.
4. Refund of the amount deposited by the petitioner.

Detailed Analysis:

1. Eligibility of the petitioner to make a declaration under the Service Tax Voluntary Compliance Encouragement Scheme, 2013:
The petitioner sought a direction to allow the deposit of the remaining 50% of the tax dues under the Scheme of 2013. The Assistant Commissioner of Central Excise rejected the petitioner's application, stating that an inquiry or investigation had been initiated before the cut-off date of 01.03.2013, making the petitioner ineligible to make a declaration under the scheme.

2. Interpretation of the initiation of inquiry or investigation under Section 106(2) of the Finance Act, 2013:
The core issue was whether the inquiry or investigation was initiated by the issuance or service of summons. The petitioner argued that the inquiry could only be considered initiated upon the service of the summons, as per Section 37C of the Central Excise Act, 1944. However, the court held that the issuance of summons before 01.03.2013 was sufficient to consider the initiation of an inquiry or investigation under Section 106(2) of the Finance Act, 2013. The court emphasized that "issuance of summons" was the key phrase, not the "service of summons."

3. Application of Section 37C of the Central Excise Act, 1944, regarding service of summons:
The petitioner contended that the service of summons should be considered as the initiation of the inquiry. However, the court clarified that Section 37C only provides the manner and method of service and does not influence the interpretation of initiation under Section 106(2) of the Finance Act, 2013. The court stated, "Section 37C of the Central Excise Act 1944 merely provides for manner and method of service of decisions, orders or summons."

4. Refund of the amount deposited by the petitioner:
Upon dismissal of the petition, the petitioner requested the refund of the 50% tax dues already deposited. The court noted that the petitioner could apply to the authority for a refund, and if rejected, the petitioner could seek redress before the appropriate forum.

Conclusion:
The court dismissed the petition, affirming that the issuance of summons before 01.03.2013 constituted the initiation of an inquiry, making the petitioner ineligible for the Scheme of 2013. The court also clarified that Section 37C does not affect the interpretation of initiation under Section 106(2) of the Finance Act, 2013. The petitioner was advised to apply for a refund of the deposited amount through the appropriate channels.

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