2015 (1) TMI 951 - HC - Service Tax

Benefit of VCES - Held that - Matter could be caused to be considered by the second respondent, who is the appellate authority before whom Ext. P4 appeal preferred under Section 85 of the Finance Act, 1994 is pending. If no appeal is maintainable and if an arbitrary and illegal order is passed by an authority, even exceeding the power and jurisdiction, the only remedy is to approach this Court invoking the power and procedure available under Article 226 of the Constitution of India. Insofar as Section 85 of the Finance Act, 1994 is there, and since no other provision is referred to with reference to Finance Act, 2013, which however makes a reference to Chapter V of the Finance Act, 1994 under Section 105 (1), it is for the second respondent to consider whether Ext. P4 appeal preferred by the petitioner is maintainable and also as to the merits of the case involved. - second respondent is directed to consider and pass appropriate orders on Ext. P4, after giving an opportunity of hearing to the petitioner, which shall be done at the earliest, at any rate, within one month from the date of receipt of a copy of this judgment. Coercive proceedings pursuant to Exts. P3 and P3(a) shall be kept in abeyance till such time - Petition disposed of.

Summary

Issues:
Challenge to Ext. P2 order under VCES, Rejection of declaration under VCES, Coercive proceedings under Section 87(b)(i) of Finance Act, 1994, Appeal under Section 85 of Finance Act, 1994, Maintainability of appeal, Proper determination order requirement, Applicability of Section 110 in coercive steps, Jurisdiction of appellate authority.

Analysis:
The petitioner contested the Ext. P2 order rejecting the declaration filed under the Voluntary Compliance Encouragement Scheme (VCES) and subsequent coercive actions under Exts. P3/P3(a) notices issued under Section 87(b)(i) of the Finance Act, 1994. The petitioner, engaged in various services since 2004, filed a declaration for the period from April 2011 to December 2012, amounting to &8377; 1,16,30,721/-. The petitioner remitted 50% of the sum by the specified date, as acknowledged by the respondent. The rejection of the declaration led to the petitioner filing an appeal under Section 85 of the Finance Act, 1994, while facing frozen bank accounts due to Exts. P3/P3(a) proceedings.

The respondent argued against the petitioner's eligibility for the Scheme citing the second proviso to Section 106(1) of the Finance Act, stating the petitioner had a final determination order for a previous year. Additionally, the respondent contended that the petitioner failed to meet the 50% requirement and disputed a &8377; 10 lakhs deposit's nature. The petitioner rebutted these claims, emphasizing compliance with the scheme's terms and the appeal's validity under Section 85. The petitioner highlighted procedural timelines and the appellate authority's power to condone delays for valid reasons.

The Court noted the maintainability of the appeal under Section 85 and directed the appellate authority to consider the appeal's merits promptly, suspending coercive actions until a decision. The Court clarified that no stance on the case's merits was expressed, leaving the issues open for further review. The judgment emphasized the appellate authority's role in determining the appeal's validity and the case's substance under the relevant provisions of the Finance Act, 1994. The Court's decision aimed at ensuring due process and timely resolution of the matter, maintaining the petitioner's right to appeal and fair consideration of the case.

In conclusion, the Court disposed of the Writ Petition, instructing the appellate authority to address the appeal promptly and provide a fair hearing to the petitioner. The judgment underscored the importance of procedural adherence and the appellate process in resolving disputes under the Finance Act, 1994, while preserving the petitioner's rights and ensuring a just outcome based on the merits of the case.