2019 (1) TMI 178 - AT - Service Tax

Rejection of VCES Declaration - the part remaining dues alongwith the interest, which was liable to be paid by 31st December, 2014, could not be paid by 31.12.2014 due to some technical issue with online payment link of CBEC and could finally been paid on 01.01.2015 - Section 107 (4) of the VCES Scheme - case of appellant is that the late payment was due to the reason beyond the control of appellant - Held that - In accordance of sub-Section (3) of Section 107, it was mandate for declaring under VCES 2013 Scheme to pay not less than 50% of the declared tax dues under the Scheme on or before 31st December, 2013. In furtherance of sub-section (4) thereof the tax dues or part remaining to be paid after the aforesaid declaration was mandatorily to be made on or before 30.06.2014 or latest by 31.12.2014. There is nothing contrary produced on record by the Department rather the adjudicating authority has considered the bonafide of the appellant. In the given circumstances, the rigid interpretation given to the word shall of Section 107 (4), to my opinion, is not justified. Since Department itself acknowledges that the appellant bonafidely attempted to deposit the part amount of their declaration on 31.12. 2014 the rigid interpretation given by the Department do not justify the circumstances. Since the admitted effort of the appellant to make the payment on the day prescribed in the Scheme is an admitted fact and had the link been functional, the payment would have been made on 31st of December, 2013 within minutes thereof. It is opined that since there is bonafide on part of the appellant and it was the technical defect beyond control of appellant that led the mandatory date for deposit to pass, the payment was made as per the dictate of the scheme - Admittedly, the entire amount in this case stands paid by 01.01.2015. Nothing stands recoverable from the appellant any more. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against rejection of declaration under Voluntary Compliance Encouragement Scheme, 2013 (VCES).
2. Interpretation of Section 107(4) of the VCES Scheme regarding payment deadlines.
3. Technical issue with online payment link leading to delayed payment.
4. Comparison with relevant case laws.
5. Adjudication of the appellant's efforts and bonafide intentions.

Issue 1: Appeal against rejection of VCES declaration
The appellant filed a declaration under the Voluntary Compliance Encouragement Scheme, 2013 (VCES) for Service Tax declaring tax dues of ?45,94,212. 50% of the tax liability was deposited by the due date, and the remaining amount was to be paid by 31st December 2014. However, due to a technical issue with the online payment link, the remaining dues could only be paid on 01.01.2015. The declaration was rejected, and the appeal was filed before the Commissioner (Appeals), who upheld the rejection. The appellant appealed to the Tribunal.

Issue 2: Interpretation of Section 107(4) of VCES Scheme
The key issue was the interpretation of Section 107(4) of the VCES Scheme, which mandated the payment of remaining tax dues by 31st December 2014. The appellant argued that the delay was due to a technical defect beyond their control, emphasizing the bonafide nature of the mistake. The appellant challenged the rigid interpretation of the Commissioner (Appeals) and cited relevant case laws to support their argument.

Issue 3: Technical issue leading to delayed payment
The technical issue with the online payment link resulted in the appellant being unable to pay the remaining tax dues by the deadline. The appellant made efforts to deposit the amount on 31st December 2014 but could only complete the payment on 01.01.2015. The Department justified the rejection based on the strict interpretation of the VCES Scheme's payment deadlines.

Issue 4: Comparison with case laws
Both parties relied on case laws such as Kasmisons Builders Pvt. Ltd. to support their arguments regarding delayed payments and the interpretation of the VCES Scheme's provisions. The Tribunal considered these references in evaluating the present case.

Issue 5: Adjudication of appellant's efforts and intentions
After hearing both parties, the Tribunal analyzed the payment history and the bonafide efforts of the appellant to comply with the VCES Scheme. The Tribunal noted that the entire payment, including interest, was made by 01.01.2015, despite the technical issue causing a delay. The Tribunal opined that the strict interpretation of the Scheme's deadlines was not justified in this case, considering the appellant's genuine attempt to make the payment on time.

In conclusion, the Tribunal set aside the order rejecting the declaration under the VCES Scheme, allowing the appeal based on the circumstances, bonafide efforts of the appellant, and the timely payment made by 01.01.2015.