2015 (10) TMI 1733 - AT - Service Tax

Rejection of application under Service Tax Voluntary Compliance Encouragement Scheme, 2013 Period of limitation for rejection of VCES application - Pendency of an inquiry while filing VCES declaration - Revenue contested that assessee s application falls under the provisions of Section 106(2)(a)(iii); assessee is not eligible to make any declaration under VCES scheme - Appellant contends to set aside the order. Held That - Notice proposing to reject the declaration is time barred in view of the clarificatory circular issued by CBE&C - Letter issued by DGCEI is of roving nature and does not attract the rejection of the declaration on the grounds mentioned in Section 106(2)(a)(iii) Impugned order set aside in favour of assessee.

Summary

Issues:
- Appeal against rejection of application under Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES)
- Eligibility criteria under Section 106(2)(a)(iii) of the Finance Act, 2013
- Time limitation for issuing notice of rejection
- Consideration of roving enquiry by DGCEI
- Adherence to CBE&C Circulars for rejection criteria

Analysis:

Issue 1: Appeal against rejection of VCES application
The appellant, M/s Abhi Engineering Corporation, filed a declaration under VCES-1 on 28.6.2013 and made full payment of tax dues as per the declaration. However, the application was sent for verification to different agencies, leading to a notice of rejection dated 15.10.2013 under Section 106(2)(a)(iii) of the Finance Act, 2013.

Issue 2: Eligibility criteria under Section 106(2)(a)(iii)
The appellant contended that they were eligible to declare tax dues under VCES as per Section 106(1) of the Finance Act, 2013. The rejection was based on the investigation initiated by DGCEI, Mumbai, under Section 14 of the Central Excise Act, which was deemed to bar the appellant from availing VCES.

Issue 3: Time limitation for issuing notice of rejection
The appellant argued that the notice of rejection dated 15.10.2013 was time-barred as per the CBE&C Circular No. 170/5/2013-ST dated 8.8.2013, which required such notices to be issued within 30 days from the date of filing the declaration. The Tribunal found the notice to be time-barred based on this circular.

Issue 4: Consideration of roving enquiry by DGCEI
The appellant emphasized that the enquiry letter from DGCEI was of a roving nature and did not pertain to Service Tax issues. They argued that such general inquiries should not lead to rejection under Section 106(2)(a)(iii) as clarified in CBE&C Circulars.

Issue 5: Adherence to CBE&C Circulars for rejection criteria
The Tribunal held that the notice proposing rejection was time-barred and the enquiry letter from DGCEI did not warrant rejection under Section 106(2)(a)(iii). It emphasized the binding nature of CBE&C Circulars on departmental officers and designated authorities, ultimately setting aside the rejection order and directing the issuance of acknowledgment under VCES.

This detailed analysis highlights the key legal arguments, interpretations of relevant provisions, and the Tribunal's decision in favor of the appellant based on procedural and substantive grounds.