2022 (5) TMI 986 - AT - Service Tax

Rejection of the application filed under the Service Tax Voluntary Compliance Encouragement Scheme (VCES), 2013 - time limitation - construction of residential complex - rejection on the ground of pendency of enquiry initiated against it before 01.03.2013 that suffered an adjudication process and gone on appeal to the Commissioner of CGST Central Excise (Appeals-II), Mumbai - period from October, 2007 to December, 2012 - HELD THAT - It can be noticed that there is a stipulation under Section 106(2) that if any enquiry, investigation or audit is pending on 01.01.2013, VCES declaration shall be rejected. However, no such documentary evidence/proof of such pending enquiry as define in Section 2(g) of the CrPC or investigation under Section 2(h) of the CrPC was found to be available in its true sense that would empower invocation of jurisdiction by the Central Excise Officer under Section 14 of the Central Excise Act except that a letter of authorisation bearing no. 6/2013 was issued on dated 20.02.2013 by the Assistant Commissioner authorising the Superintendent of Anti-evation Consideration Cell to carryout necessary verification of service provided by M/s. Kamla Group or its associated company and Service Tax liability that has been discharged by them before the deadline prescribed in the scheme i.e. before 01.03.2013. In the instant case notice for personal hearing proposing rejection of application filed under VCES was issued to the Appellant on 1 st September, 2015 (page 80 of the appeal memo) which is admittedly after laps of one year of filing of the VCES application on 18.12.2015 and therefore such a proceeding including rejection order is liable to be quashed as unsustainable in law. The order passed by the Commissioner of CGST Central Excise (Appeals-II), Mumbai vide rejecting the VCES application filed by the Appellant is hereby set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Rejection of Service Tax Voluntary Compliance Encouragement Scheme (VCES) application due to pending enquiry, violation of time limits, and sustainability of rejection order.

Analysis:
1. Pending Enquiry: The Appellant's VCES application declaring a Service Tax liability for construction of a residential complex was rejected due to a pending enquiry initiated before 01.03.2013. The Appellant argued that no show-cause notice was issued within 30 days as per CBEC Circular, and the rejection was unsustainable in law. The Respondent contended that the rejection was justified based on the pending enquiry against M/s. Kamla Group, including the Appellant.

2. Legal Interpretation: The Tribunal analyzed the relevant provisions of the Finance Act, 2013 and previous judgments. It was noted that Section 106(2) stipulates rejection of VCES declaration if any enquiry is pending on 01.01.2013. However, the Tribunal found no concrete evidence of a pending enquiry as defined in the CrPC. The Appellant's declaration stated no pending enquiry, and the notice for personal hearing proposing rejection was issued after the one-year limitation period, rendering the proceeding unsustainable in law.

3. Judicial Precedents: The Tribunal discussed the applicability of judicial precedents, emphasizing that Circulars cannot override statutory provisions. Reference was made to the judgment in Ratan Melting & Wire Industries case, highlighting the importance of strictly following statutory timelines. The Tribunal differentiated between Single Member and Division Bench orders, emphasizing the binding nature of statutory provisions over Circulars.

4. Immunity and Order: Section 108 of the Finance Act, 2013 provides immunity to the Appellant from other proceedings except under Section 111. The Tribunal allowed the appeal, setting aside the order rejecting the VCES application. The decision was based on the limitation prescribed under Section 111(2) of the Finance Act, 2013, emphasizing the statutory provisions over Circulars.

In conclusion, the Tribunal's judgment focused on the legality of rejecting the VCES application based on a pending enquiry, violation of time limits, and the overriding importance of statutory provisions over Circulars. The decision to set aside the rejection order was grounded in the interpretation of relevant legal provisions and judicial precedents, ensuring adherence to statutory timelines and procedural fairness.