2023 (8) TMI 1145 - AT - Service Tax

Rejection of the declaration filed by the appellant under Voluntary Compliance Encouragement Scheme, 2013 (VCES) - enquiry or investigation in terms of Section 106(2) of the Finance Act, 2013 on the basis of which the declaration for VCES has been rejected is of a roving nature or not - SCN is time barred having been received by the appellant beyond the specified period of thirty days, or not - HELD THAT - The contents of the letter on Service Tax Enquiry, are of very general nature whereby documents have been asked for without any specific details, which in other words would mean that the enquiry which appears to have been contemplated in terms of the said letter was merely of roving nature and would therefore not call for rejection on that ground under section 106(2) of the Act. The show cause notice in the present case is time barred and cannot be acted upon. Further, the Circular dated 25.11.2013 in unequivocal words has stated that, Commissioner should ensure that the said time limit of giving the notice within 30 days has to be followed scrupulously. It is added that the very nomenclature of the scheme is to promote voluntary encouragement by the assessee to make the declaration of the tax dues. Since the very purpose of introducing the scheme is to motivate the registered assessee who had stopped filing the returns to file returns and pay the taxes. The underlying object is to reduce unnecessary litigation, which is evident from the clarifications made in the Circulars. The VCES Scheme as further clarified in the Circulars needs to be implemented so as to give full play which would not only benefit the assessee but also the revenue. The revenue should accept the declaration filed by the appellant - Appeal allowed.

Summary

Issues Involved:
1. Whether the enquiry or investigation in terms of Section 106(2) of the Finance Act, 2013 on the basis of which the declaration for VCES has been rejected is of a roving nature?
2. Whether the show cause notice in question is time barred, having been received by the appellant beyond the specified period of thirty days?

Summary:

Issue 1: Enquiry or Investigation of Roving Nature

The Tribunal examined whether the enquiry initiated against the appellant was of a roving nature, as per Section 106(2) of the Finance Act, 2013. The appellant contended that the letter dated 18.02.2013, which requested general documents, did not specify any particular issue, thus constituting a roving enquiry. The Tribunal referred to Circulars No. 169/4/2013-ST, 170/5/2013-ST, and 174/9/2013-ST, which clarified that general communications seeking documents without specific details do not attract Section 106(2)(a)(iii). The Tribunal also relied on the Bombay High Court's decision in Commissioner of Central Excise, Commissionerate Nagpur-II Nagpur vs. L. V. Construction & Company, which held that enquiries of a roving nature do not justify rejection under Section 106(2). The Tribunal concluded that the enquiry in the appellant's case was of a roving nature and thus, the declaration should not have been rejected on this ground.

Issue 2: Time Barred Show Cause Notice

The appellant argued that the show cause notice, although dated 24.01.2014, was received on 03.02.2014, beyond the thirty-day period required by the Circular dated 08.08.2013. The Tribunal agreed, stating that the term "give" implies that the notice must be received by the appellant within the specified period. The Tribunal cited the Supreme Court's decision in MCD vs. Dharma Properties (P) Ltd., which clarified that mere dispatch does not constitute "giving" of notice; it must be received by the addressee. Consequently, the Tribunal held that the show cause notice was time barred and could not be acted upon.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal and directing the revenue to accept the declaration filed by the appellant. The decision emphasized the importance of implementing the VCES Scheme to encourage voluntary compliance and reduce unnecessary litigation, adhering strictly and narrowly to the conditions prescribed in Section 106(2) of the Finance Act. The appeal was allowed with no order as to costs.