2016 (6) TMI 19 - AT - Service Tax

Whether the rejection of declaration filed by the appellant under service tax Voluntary Compliance Encouragement Rules (VCES) is correct or not - investigation against them is still under process - Appellant filed VCES declaration and paid the amount of disputed tax - Designated authority issued show cause notice of his intention to reject the said VCES declaration - Held that - this issuance of show cause notice is against the Board Circular No. 169/4/2013-ST dated 13/05/2013. The designated authority has to indicate his intention of rejection of VCES within 30 days of the VCES being filed. As the designated authority, has issued a show cause notice beyond the period, as indicated by the Board, the said show cause notice for intention of rejecting the VCES is non-est. Impugned orders is unsustainable and is set aside. - Decided in favour of appellant

Summary

Issues:
- Whether the rejection of declaration filed under service tax Voluntary Compliance Encouragement Rules (VCES) is valid.

Analysis:
1. The appellant filed a VCES declaration and paid service tax dues as per the procedure. The authorities acknowledged the payment but later issued a show cause notice for rejection due to an ongoing investigation. The appellant contested the notice on limitation and merits, but the declaration was rejected.

2. The appellant's advocate highlighted compliance with VCES conditions and the issuance of the show cause notice beyond the specified period. The Departmental Representative argued that rejection was correct due to the ongoing investigation. The court requested precedent judgments regarding jurisdiction to entertain appeals on VCES rejections.

3. Referring to a High Court judgment and a Tribunal decision, the court established its jurisdiction to hear appeals related to VCES rejections. The appellant had filed the VCES declaration, paid the disputed tax, and the show cause notice for rejection was issued beyond the stipulated period, contrary to Circular No. 169/4/2013-ST.

4. The Circular clarified that the designated authority must indicate rejection intention within 30 days of VCES filing. As the show cause notice in this case exceeded this period, it was deemed non-est. Consequently, the court found merit in the appellant's appeal and set aside the impugned orders, allowing the appeal.

This detailed analysis of the judgment outlines the issues, arguments presented by both sides, relevant legal precedents, and the court's decision based on the facts and legal provisions involved in the case.