2016 (6) TMI 323 - HC - Service Tax

Denial of benefit of Voluntary Compliance Encouragement Scheme, 2013 - Delayed payment of second installment of 50% amount - Recovery of service tax dues for the period April 2008 to March 2015 - Petitioner paid 50% of the tax dues and the balance amount of 50% together with interest thereon was paid by him only on 06.01.2015 - Held that - the VCES Scheme, 2013, is in the nature of an Amnesty Scheme and, therefore, its provisions have to be strictly interpreted, and the time limit specified in the Scheme for the payment of amounts together with interest have to be strictly adhered to. The scheme partakes of the nature of a settlement between the assessee and the department and from the terms of the settlement neither party can be permitted to resile. To allow the petitioner to effect payments belatedly would tantamount to altering the terms of the settlement and that cannot be done by this Court in exercise of its powers under Art. 226 of the Constitution of India. In the instant case, although the delay occasioned by the petitioner is only of six days from the cut off date mentioned under the Scheme, it has to be borne in mind that the actual amount to be paid under the Scheme was to be paid on or before June 2014 and the extension of time from June 2014 to 31st December, 2014, itself was by way of an exception to the main provisions so as to enable a defaulter to pay the amounts that fell due by June 2014, on or before 31.12.2014, by paying the same together with interest thereon. Here, the petitioner did not effect payment of the amounts even before the extended date of 31.12.2014. Therefore, the petitioner cannot claim the benefit of the VCES Scheme, 2013. - Decided against the petitioner

Summary

Issues:
Challenge against Ext.P6 communication under Voluntary Compliance Encouragement Scheme, 2013 - Denial of Scheme benefit due to delayed payment - Interpretation of VCES Scheme, 2013 provisions - Strict construction in favor of revenue or assessee.

Issue 1: Challenge against Ext.P6 communication under VCES, 2013

The petitioner challenged Ext.P6 communication by the 2nd respondent, stating that due to a delayed payment under the VCES Scheme, the petitioner would be denied the scheme's benefit and recovery of service tax dues for April 2008 to March 2015 would be enforced. The petitioner paid 50% of the tax dues on time but the remaining 50% with interest was paid six days late. The contention was that this slight delay should not result in the denial of the scheme's substantive benefit.

Issue 2: Interpretation of VCES Scheme, 2013 provisions

The court analyzed whether the petitioner could be denied the scheme's benefit entirely due to a mere six-day delay in paying the balance 50% under the VCES Scheme, 2013. The petitioner argued that exemption provisions under taxing statutes should be strictly construed against the assessee but broadly interpreted once entitlement is established. In contrast, the respondents contended that the VCES Scheme, 2013, being an Amnesty Scheme, should be strictly interpreted in favor of the revenue and against the assessee.

Analysis:

The court acknowledged the petitioner's compliance with the first tranche payment but noted the delay in paying the second tranche beyond the specified date. It determined that the VCES Scheme, 2013, being an Amnesty Scheme, required strict adherence to its provisions, especially regarding payment timelines. The court emphasized that the scheme represented a settlement between the assessee and the department, with both parties bound by its terms. Allowing belated payments would alter the settlement terms, which the court could not permit under its constitutional powers. Despite the minor delay of six days, the petitioner failed to pay even before the extended deadline, leading to the conclusion that the petitioner could not claim the scheme's benefit. Consequently, the writ petition was dismissed.