2019 (4) TMI 1968 - AT - Service Tax

Non-consideration of application under Voluntary Compliance Encouragement Scheme, 2013 - application rejected on the ground that the investigations initiated against the appellants were pending as on 01.03.2013 and thus, the said applications cannot be considered for adjudication under Section 106(2) of the Finance Act, 2013 - SCN not issued within 30 days from the date of filing of the declaration - HELD THAT - Section 106(2) of the Finance Act, 2013 prohibits filing of declaration under the VCES by the applicant under certain circumstances. On perusal of the statutory provisions u/s 106(2), it transpires that specific enquiry/investigation initiated by the department, requiring production of the relevant records should not be considered for the benefit provided under VCES and the declaration filed by the applicant is liable for rejection, upon compliance of the statutory provisions. The department in this case, had issued the summon dated 16.01.2013 under Section 14 of the Central Excise Act, 1944, calling upon the appellant for submission of records such as, balance sheet, ledger accounts, work orders, invoices and other related service tax records/documents etc., concerning the taxable service provided by the appellant. Since, the summon issued by the department clearly specified the documents required for verification of the issue regarding discharge of appropriate service tax liability, it cannot be said that the appellant is falling under the execution category provided under Section 106(2) ibid. SCN not issued within 30 days from the date of filing of the declaration - HELD THAT - The Finance Act, 2013, governing the VCES nowhere specified the time limit within which the notice has to be issued by the department. The CBEC vide paragraph 12 in the circular dated 08.08.2013 has only clarified maintaining uniformity regarding issuance of notice within 30 days. Since, there is no specific time limit provided under the statute, the circular merely clarifying the position of issuance of show cause notice within specified time limit cannot override the provisions of the legislation and accordingly, the stand taken by the appellant cannot be considered as proper and justified. Appeal dismissed.

Summary

Issues involved: Rejection of applications under Voluntary Compliance Encouragement Scheme, 2013 (VCES) due to pending investigations as on 01.03.2013.

Analysis:
1. Appellant's Argument: The appellant argued that the summons issued by the department were general in nature and not specific to any offense or inquiry. They relied on a circular clarifying the consideration of investigations for VCES benefits and a tribunal decision highlighting that mere inquiry does not warrant rejection under VCES. They also emphasized that the circular specifying a 30-day notice period for show cause notices must be strictly followed, citing a Supreme Court judgment.

2. Revenue's Argument: The Revenue contended that rejection of the appellant's VCES declaration was justified as investigations were active on the scheme's enactment date. They argued that the circular specifying the notice period contradicts statutory provisions and cannot be relied upon, citing a Supreme Court judgment.

3. Court's Analysis: Section 106(2) of the Finance Act, 2013 prohibits VCES declarations under specific circumstances. The court noted that the summon issued to the appellant was for specific records related to service tax, not a general inquiry. Referring to a CBEC circular, the court clarified that certain types of communications do not trigger Section 106(2)(a). The court highlighted that the circular's 30-day notice period clarification does not override statutory provisions, as the Act does not specify a time limit. Citing a Supreme Court judgment, the court emphasized that circulars contrary to statutes hold no legal weight.

4. Decision: The court found no issues with the rejection of the VCES applications, as investigations were active on the scheme's enactment date. The appeals were dismissed, upholding the impugned orders.