2018 (9) TMI 331 - HC - Service Tax

Rejection of benefit of VCES, 2013 - recovery of Interest - Appealable order or not? - Voluntary Compliance Encouragement Scheme 2013 - Held that - Prima facie it is not open to the Revenue to recover amounts under the above Voluntary Compliance Encouragement Scheme, 2013. The Revenue would be required to follow the procedure as provided under the Finance Act, 1994 to recover its dues after issuing a proper notice. The recovery notice in the absence of any adjudication order prima facie is without jurisdiction - there would be an interim stay of the recovery dated 4th November 2016 till the final disposal of this Petition.

Summary

Issues:
Challenge to order under Service Tax Voluntary Compliance Encouragement Scheme 2013; Recovery notice seeking interest recovery; Appealability of the order under Finance Act, 1994.

Analysis:
The judgment by the High Court of Bombay dealt with a petition challenging an order dated 30th December 2015 issued by the Designated Authority under the Service Tax Voluntary Compliance Encouragement Scheme 2013, along with a recovery notice dated 4th November 2016 seeking to recover interest of ?8.69 Lakhs. The primary issue under consideration was whether the order dated 30th December 2015 was appealable under the Finance Act, 1994. The court noted that the appealability of such orders was pending consideration before the Apex Court in a related case.

Regarding the recovery notice dated 4th November 2016, the court observed that it was a consequence of the earlier order. The Revenue contended that the petitioner was not entitled to the benefits of the Voluntary Compliance Encouragement Scheme 2013, leading to the attempt to recover the amount. However, the court held that without proper adjudication, it was not open for the Revenue to recover amounts under the scheme. The court granted an interim stay on the recovery notice, emphasizing that the Revenue must follow the procedure outlined in the Finance Act, 1994 for recovery after issuing a valid notice. The court clarified that the Revenue could pursue recovery proceedings under the Finance Act, 1994 after confirming the notice of demand in accordance with the law.

In conclusion, the court granted an interim stay on the recovery notice dated 4th November 2016 until the final disposal of the petition. The petitioner, being a Senior Citizen, was granted expedition of the petition with liberty to apply. Ms. Cardozo, representing the respondents, waived service during the proceedings.