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2022 (12) TMI 1296 - AT - Service TaxVCES scheme - Non-issuance of notice of rejection - Recovery of service tax alongwith interest and penalty - Non-payment of service tax due on the GTA services availed by them under reverse charge mechanism during the period April 2008 to March 2013 - failure to take service tax registration and failure to file returns as required under law - HELD THAT - The VCES scheme has provided itself contents and has been explained by the Board in terms of various circulars issued. Once a declarant files a declaration admitting the tax liability for the period upto December 2012 in Form VCES-1, Revenue has to issue the acknowledgment in VCES-2 or reject the same by issuing a notice to the declarant. If no such rejection is done, the declarant proceeds to make the payment of the declared liability and intimates to the concerned designated authority who issues the final discharge certificate in Form VCES-3. In the present case it is not even the case of the Revenue that VCES declaration filed by the appellant has been rejected or even a notice for such rejection has been issued. It is settled law that the notice for rejection of the declaration has to be issued within thirty days as per Board Circular No 174/9/2013-ST. In absence of any such notice for rejection, it is but natural that appellant would act as per VCES-2 issued to him acknowledging the declaration. Appellant paid the declared liability and intimated the designated authority of the payment made. Even then the designated authority has not issued the settlement memo under Form VCES-3. Appellant cannot be faulted for the reason as stated in the impugned order. Section 111 of the Finance Act, 2013 clearly provides that in case there is some liability or the declaration made is found to be improper substantially, then a show cause notice for confirming the additional tax liability would be issued under Section 111. No such notice has also been issued. In absence of notice under Section 111, there cannot be a case for rejection of the declaration made by the appellant under VCES scheme. It is for the Revenue/designated authority to issue VCES scheme and failure to issue the same cannot be the ground for proceeding against the appellant. Revenue should set its record right. Demand made for the period January 2013 to March 2013 - HELD THAT - The appellant paid the entire amount even prior to issuance of show cause notice. The benefit of Section 73(3) of the Finance Act, 1994 should have been extended to them by not issuing the show cause notice. As all amounts were paid prior to the issuance of show cause notice, the proceedings initiated cannot survive in terms of Section 73(3) of the Finance Act, 1994. Appeal allowed.
Issues Involved:
1. Recovery of unpaid/short-paid service tax. 2. Recovery of interest on unpaid/short-paid service tax. 3. Imposition of penalties for various contraventions. 4. Applicability and compliance with the Voluntary Compliance Encouragement Scheme (VCES). 5. Issuance of show cause notice under Section 73(1) of the Finance Act, 1994. Detailed Analysis: 1. Recovery of Unpaid/Short-Paid Service Tax: The Assistant Commissioner of GST & Central Excise, Division IV, Bhiwandi, ordered the recovery of service tax amounting to Rs. 1,94,437/- for the period October 2008 to March 2013 from the appellant under Section 73(1) of the Finance Act, 1994. The appellant had not paid the service tax due on the Goods Transport Agency (GTA) services availed under the reverse charge mechanism during the specified period. 2. Recovery of Interest on Unpaid/Short-Paid Service Tax: Interest on the unpaid/short-paid service tax was ordered to be recovered from the appellant at the applicable rate under Section 75 of the Finance Act, 1994. This was in line with the statutory provisions mandating interest on delayed payment of service tax. 3. Imposition of Penalties for Various Contraventions: Several penalties were imposed on the appellant: - A penalty equal to the service tax amount (Rs. 1,94,437/-) under Section 78 for non-payment of service tax by suppressing facts with intent to evade payment. - A penalty of Rs. 10,000/- under Section 77(1a) for failure to obtain service tax registration. - A penalty of Rs. 10,000/- under Section 77(2) for failure to file ST-3 returns and properly quantify the value of services rendered. - Payment of applicable late fees of Rs. 20,000/- for each return not filed for the period ending March 2009 to March 2013. 4. Applicability and Compliance with VCES: The appellant had filed a declaration under the VCES in January 2014 for the period April 2008 to December 2012, which was acknowledged by the department. The appellant made the payment of the admitted tax liability, but the VCES-3 certificate was not issued. The Commissioner (Appeals) held that the appellant failed to complete the VCES process due to the absence of the VCES-3 certificate and the initiation of audit before opting for VCES, making them ineligible for the scheme as per Section 108(2) of the Finance Act, 2013. 5. Issuance of Show Cause Notice under Section 73(1) of the Finance Act, 1994: The show cause notice dated 22.04.2014 demanded service tax for the period October 2008 to March 2013. The appellant argued that the demand was invalid as they had already paid the service tax under the VCES and for the period January 2013 to March 2013 along with interest before the issuance of the notice. The Commissioner (Appeals) upheld the demand, but the appellate tribunal found that no notice for rejection of the VCES declaration was issued, and the appellant acted as per the VCES-2 acknowledgment. Conclusion: The appellate tribunal allowed the appeal, stating that the appellant could not be faulted for the non-issuance of the VCES-3 certificate by the designated authority. The tribunal emphasized that the appellant paid the declared liability and intimated the designated authority. The tribunal also noted that the demand for the period January 2013 to March 2013 should not have been raised as the appellant paid the amount before the issuance of the show cause notice, invoking Section 73(3) of the Finance Act, 1994. The appeal was thus allowed, and the order pronounced in the open court.
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