2019 (1) TMI 1173 - AT - Service Tax

Rejection of VCES-1 declaration - failure to make true declaration - it was alleged that substantially false declaration was made - case of Revenue is that that the submissions now advanced were never raised in reply to the show cause notice though sufficient opportunity was granted to the appellant to not only file a reply to the show cause notice but repeated opportunities were also given to the appellant to appear and explain - principles of natural justice - Held that - It is true that the appellant did not file a proper reply to the show cause notice to explain the position nor the appellant availed the opportunity provided to it to appear in person and explain the correct position. However, from the submissions made by learned Counsel for the appellant and the documents that have been brought on record in the appeal, we feel it would be appropriate to remand the matter to the Commissioner for a fresh adjudication on the show cause notice dated 25 June, 2014 - The appellant is, therefore, permitted to file an additional reply to the show cause notice with supporting documents within a period of six weeks from today and if the appellant desires a personal hearing, the same may be given - a cost of ₹ 50,000/- is imposed on the appellant, which the appellant shall deposit within a period of one month from today - appeal allowed by way of remand.

Issues Involved:
1. Validity of the declaration under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (2013 Scheme).
2. Alleged mis-declaration and suppression of facts by the appellant.
3. Correctness of the service tax liability computation.
4. Procedural lapses and opportunity for personal hearing.

Issue-wise Detailed Analysis:

1. Validity of the Declaration under the 2013 Scheme:
The appellant filed a declaration under the 2013 Scheme on 28 June 2013, which was acknowledged by the department on 2 July 2013. The appellant deposited the required tax dues in two installments. However, the Commissioner rejected the declaration, categorizing it as "substantially false" under Section 105(e) of the Finance Act, 2013. The appellant contended that the declaration was true and that there was no malafide intention to hide any facts.

2. Alleged Mis-declaration and Suppression of Facts:
The show cause notice issued on 25 June 2015 alleged that the appellant had not declared the true tax dues and had suppressed taxable receipts. The department's investigation revealed discrepancies between the declared tax dues and the actual taxable receipts. The appellant was accused of not declaring the full amount of service tax due for the period from 2009-2010 to December 2012, resulting in a shortfall of ?33,36,435.

3. Correctness of the Service Tax Liability Computation:
The appellant argued that the service tax liability computed by the department was incorrect. The appellant claimed to have opted to pay service tax under Sub-Rule 7 of Rule 6 of the Service Tax Rules, 1994, which allows air travel agents to discharge their service tax liability based on a percentage of the basic fare. The appellant contended that service tax was not payable on certain charges such as commission, voiding/cancellation charges, service charges, mark-up on tickets, handling charges, visa services, and documentation charges, as mentioned in Annexure A of the show cause notice.

4. Procedural Lapses and Opportunity for Personal Hearing:
The appellant did not file a proper reply to the show cause notice nor availed the opportunity to appear in person to explain the position. The Tribunal noted that it would be appropriate to remand the matter to the Commissioner for fresh adjudication, allowing the appellant to file an additional reply with supporting documents and request a personal hearing if desired.

Conclusion:
The Tribunal set aside the impugned order dated 17 April 2015 and remanded the matter to the Commissioner for fresh adjudication. The appellant was permitted to file an additional reply to the show cause notice within six weeks and was given the opportunity for a personal hearing. A cost of ?50,000 was imposed on the appellant for failing to file a proper reply and not appearing in person, which was to be deposited in the Prime Minister's Relief Fund. The Commissioner was directed to pass a fresh order preferably within two months from the date the reply is filed by the appellant.

← Previous Next →