2016 (7) TMI 602 - HC - Service Tax

Recovery proceedings - Failure to deposit the amount of service tax delcared in the VCES 2013 - Petitioner requested for extending the period of the Scheme. - Held that - petitioner is not entitled for any relief. - The Scheme is statutory in nature and unless the provisions in the statute are complied within the time specified, it shall always be open for the respondent authorities to take necessary steps to collect the interest as well as penalty in accordance with law. As far as the prohibitory order is concerned, even if quantification of the interest and penalty, if any, is pending, nothing prevents the department from initiating appropriate action by way of garnishee proceedings and the same also cannot be challenged. - Decided against the petitioner.

Summary

Issues Involved:
Challenge to rejection of request for extending the period of the Voluntary Compliance Encouragement Scheme, 2013 (Scheme); Compliance with the terms of the Scheme; Authority to collect interest and penalty; Prohibitory orders and garnishee proceedings; Quantification of amount payable by the petitioner.

Analysis:

1. Challenge to Rejection of Scheme Extension Request:
The petitioner challenged the rejection of their request to extend the period of the Voluntary Compliance Encouragement Scheme, 2013 (Scheme) in order to pay the specified amount. The Court noted that the petitioner had applied under the Scheme but failed to remit the amount within the stipulated time, leading to the rejection of the request for extension.

2. Compliance with Scheme Terms:
The respondents contended that if no payment is made as per the Scheme, the petitioner would be liable for other consequences. The Court observed that the Scheme is statutory in nature, and failure to comply with its terms allows the authorities to take necessary steps to collect interest and penalty as per the law. The petitioner's argument that recovery steps could not be taken without quantification of interest and penalty was not accepted.

3. Authority to Collect Interest and Penalty:
The Court affirmed that in case of non-compliance with the Scheme's terms to pay declared tax dues, the Department could invoke Section 87 of the Finance Act to take further action. It emphasized that the authorities have the power to collect interest and penalty if the provisions of the statute are not complied with within the specified time.

4. Prohibitory Orders and Garnishee Proceedings:
Regarding the prohibitory orders attaching the petitioner's bank account, the Court stated that even if quantification of interest and penalty was pending, the Department could initiate garnishee proceedings without challenge. It clarified that such actions cannot be contested by the petitioner.

5. Quantification of Amount Payable:
In conclusion, the Court directed the respondent authorities to quantify the amount due from the petitioner and make a demand within one month from the date of the judgment. This decision aimed to ensure clarity on the amount payable and facilitate further action by the authorities in accordance with the law.

In summary, the judgment upheld the statutory nature of the Scheme, emphasized compliance with its terms, affirmed the authority to collect interest and penalty, allowed for garnishee proceedings, and directed the quantification of the amount payable by the petitioner within a specified time.