2017 (10) TMI 451 - AT - Service Tax

Rejection of VCES Scheme - case of Revenue is that appellant have not made true Declaration - non-issuance of SCN - Held that - the Commissioner of Central Excise has the reason to believe that declaration made by the appellant under this scheme is false, therefore, the reasons to be recorded in writing is wrong. Serving the notice to the appellant with regard to such declaration requiring him to show cause why he has not paid or short paid. Section 111 (1) to (2) of the Act further provides no information shall be taken under subsequent after expiry of one year from the date of declaration. In this case, it is an admitted fact that no show cause notice in writing in compliance to section 111 of the Act has been issued to the appellant. Further, the mandate of section 111(2) is that after one year from the expiry of date of declaration, no action shall be taken - Admittedly, as no show cause notice has been issued to the appellant, in that circumstances, the declaration filed by the appellant is required to be accepted. - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of declaration under Voluntary Compliance Encouragement Scheme (VCES) - Compliance with VCES provisions - Requirement of show cause notice before rejection of claim - Interpretation of Section 111 of the Finance Act, 2013.

Analysis:
The appellant filed a declaration under VCES, declaring an amount to be paid under the scheme. The appellant later submitted an undertaking showing a different amount paid under VCES. The department rejected the claim stating that the appellant did not comply with VCES provisions as the declared amount differed from the paid amount. The appellant argued that they had voluntarily filed the declaration and were entitled to VCES benefits. The appellant contended that no show cause notice was issued before rejecting their claim, which is a requirement. The department opposed, stating that the appellant did not make a true declaration as per VCES provisions. The Tribunal considered the submissions and examined Section 111 of the Finance Act, 2013, which deals with failure to make a true declaration under VCES.

The Tribunal found that the Commissioner had reason to believe that the appellant's declaration was false, but no show cause notice was issued as required by Section 111 of the Act. The Act specifies that no action can be taken after one year from the date of declaration without issuing a show cause notice. Since no such notice was issued to the appellant, the Tribunal held that the appellant's declaration should be accepted. Consequently, the impugned order rejecting the claim was set aside, and the appeal was allowed with consequential relief.