2015 (9) TMI 736 - AT - Service Tax

Rejection of declaration under VCES - Architect Services - Show Cause Notice had already been issued to the appellant - whether the date of the show Cause Notice or the date on which it was served on the parson, has to be taken into consideration for interpreting the provisions of Section 106 of the Act, which places an embargo to the effect, that no declaration shall be made for the tax dues where the notice has been issued to the person before 01.03.2013 - Held that - as Section 106 of the Finance Act, 2013 prohibits filing of VCES declaration, where the notice under Section 73 of the Finance Act, 1994 has already been issued. The intention for incorporating such an embargo in Section 106 of the Finance Act, 2013 is to dissuade persons against whom proceedings have been initiated, from taking the shelter of VCES. A person who wants to avail the option/benefit of VCES should not be disqualified to make a declaration as laid in the said provisions of law. To be able to decide whether one is disqualified as per the law, the notice/order must be put to the knowledge of the person. Any notice, which is merely issued but not served cannot be said to be within the knowledge of the person against whom it is issued but not served . Since the Show Cause Notice No. 28/213-ST dated 22.02.2013 issued under Section 73 of the Finance Act, 1994 has not been served on the appellant before 01.03.2013, the impediment of Section 106 of the Finance Act, 2013 regarding non-filing/non-consideration of declaration under VCES will have no application; and since the appellant otherwise fulfills the criteria of Finance Act, 2013, the benefits envisaged therein for availing the waiver of interest and penalties will be available to him. - Decided in favour of assessee.

Summary

Issues:
Rejection of declaration under VCES-I form - Interpretation of Section 106(1) of the Finance Act, 2013 - Service of notice versus issuance of notice.

Analysis:

Issue 1: Rejection of Declaration under VCES-I Form
The appellant, a provider of Architect Services, filed a declaration under the Voluntary Compliance Encouragement Scheme, 2013 (VCES) for tax dues amounting to Rs. 47,84,597 for the period December 2009 to November 2012. The jurisdictional Assistant Commissioner issued a Show Cause Notice seeking rejection of the declaration due to a previous notice demanding service tax. The appellant argued that as the earlier notice was not served before a specific date, disqualification under Section 106(1) of the Finance Act, 2013 should not apply. The Assistant Commissioner and the Commissioner (Appeals) upheld the rejection based on the provisions of the Act. The Tribunal analyzed the applicability of Section 106(1) and the timing of notice issuance versus service to determine the eligibility of the appellant for VCES benefits.

Issue 2: Interpretation of Section 106(1) of the Finance Act, 2013
Section 106(1) of the Finance Act, 2013 outlines the conditions for declaring tax dues under VCES. The key contention revolved around whether the date of issuance or service of a Show Cause Notice should be considered for determining eligibility under VCES. The appellant argued that as the notice was not served before the relevant date, disqualification should not apply. The Tribunal examined the language of the Act and previous legal precedents to interpret the requirement of notice service for invoking Section 106(1).

Issue 3: Service of Notice versus Issuance of Notice
The Tribunal deliberated on the distinction between the issuance and service of a notice in the context of Section 106(1) of the Finance Act, 2013. It noted that the Act mandates the service of notices within specified time frames for them to be considered valid. Legal precedents were cited to emphasize that mere issuance of a notice does not equate to service, and the crucial factor is the recipient's knowledge of the notice. The Tribunal concluded that as the Show Cause Notice was not served before the relevant date, the appellant should not be disqualified from availing VCES benefits, as per the provisions of the Act.

In conclusion, the Tribunal set aside the impugned order rejecting the VCES-I declaration filed by the appellant, allowing the appeal with consequential reliefs. The judgment clarified the importance of notice service in determining eligibility under VCES and highlighted the necessity for strict adherence to statutory requirements for disqualification under the Act.