2023 (5) TMI 893 - AT - Service Tax

Validity of dropping of demand - respondent have filed the declaration under VCES 2013; VCES-2 has been issued to the respondent on payment of 100% tax dues for the period 01.04.2008 to 31.03.2013 - HELD THAT - From the records of the case that the adjudicating authority records finding to the effect that the respondent filed a declaration under VCES-2013 on 18.11.2013 and VCES-2 (acknowledgement of declaration) was issued to them on 18.11.2013; the respondent claim that they did not receive any VCES-3; no order for rejection also has been received. Commissioner has observed that as the audit of the records of the respondent was conducted on 21, 21 and 24 June, 2013, the respondent was eligible for opting for VCES as no enquiry, investigation or audit has been initiated were pending against them as on 01.03.2013; they have made payment of 100% tax dues on 21.11.2013; the Designated Authority did not issue VCES-3 within 7 working days from the date of furnishing of details of payment of tax dues in full under sub-Section (vii) of section 107 of the Act. Commissioner rightly held that under the circumstances that he did not have any other option, but to accept the declaration of the respondent. As the respondent discharged service tax liability under VCES 2013, they shall get immunity from penalty, interest and other proceedings and, therefore, the SCN was dropped. Adjudicating authority further finds that as the demand raised for the period 01.01.2013 to 31.03.2013 also stands paid by the respondents, the demand is liable to be dropped. The adjudicating authority has correctly held that as 100% service tax stands paid by the respondent under VCES, the proceedings initiated vide above SCN do not survive. The SCN was issued demanding service tax of Rs. 6,67,48,423/- whereas the appellants have paid on their own account Rs. 12,09,58,530/- plus Rs. 3,58,86,886/-. As such there was no way that Commissioner could have confirmed a lesser amount than the amount paid by the appellants. Moreover, the appellants have paid 100% tax under VCES 2013; the payment was not rejected by designated authority and in terms of section 109 of VCES 2013, the assessee is not entitled for any refund. Under the circumstances appropriation of duty is an empty formality. Appeal of Revenue rejected.

Summary

Issues:
The issues involved in the judgment are:
1. Whether the demand for service tax should be dropped due to payment under Voluntarily Compliance Encouragement Scheme (VCES).
2. Whether the adjudicating authority erred in dropping the demand for the period beyond the VCES.

Issue 1:
The respondent, a registered entity with the Service Tax Department, was found to be providing services falling under the taxable category of "Renting of Immovable Property Services." A show cause notice was issued demanding service tax of Rs. 6,67,48,423/- along with interest and penalties. The Commissioner initially dropped the proceedings, but the Revenue appealed, arguing that the demand should not have been dropped as the respondent had paid the service tax under VCES for certain periods.

Issue 2:
The Revenue contended that the adjudicating authority erred in dropping the demand for the period beyond the VCES, i.e., for the period 01.01.2013 to 31.03.2013. However, the adjudicating authority found that as the respondent had paid 100% service tax under VCES 2013, they were entitled to immunity from penalties, interest, and other proceedings. The Commissioner held that since the respondent had discharged their service tax liability under VCES, the demand for the specified period should be dropped.

Conclusion:
The appellate tribunal upheld the decision of the adjudicating authority, stating that there was no legal infirmity in dropping the demand for service tax. The tribunal found that the respondent had paid more than the demanded amount under VCES and was entitled to immunity from penalties. Therefore, the Revenue's appeal was rejected, and the order was upheld.