2025 (3) TMI 1062 - AT - Service Tax

Time Limitation u/s 111 of the Finance Act 2013 - notice served within the statutory period of one year from the date of the declaration filed by the appellant under the Voluntary Compliance Encouragement Scheme (VCES) 2013 or not - HELD THAT - On going through the show cause notice it is amply clear that the demand has been raised in terms of provisions under Section 111 of the Finance Act 2013 read with Section 73 of the Finance Act 1994. Therefore the charge for issuing the show cause notice is Section 111. There is no separate ground or provision which has been relied by the Department to invoke extended period etc. in terms of Section 73 and therefore the maintainability of the show cause notice has to be examined within the provisions contained under Section 111 of the Finance Act itself. As can be seen that the provision is very clear that where the Commissioner of Central Excise has reasons to believe that the declaration made by the declarant under the Scheme was substantially false he may serve notice in respect of such declaration requiring him to show cause why he should not pay the amount not paid or short paid. In this case the date of declaration is clearly and admittedly 31.12.2013 when the appellant had filed their Declaration bearing no. 1500/2013 dated 31.12.2013 for an amount of Rs. 37 59 354/-. When was the notice served on the declaration in respect of such declaration? - HELD THAT - In this case as per the factual and admitted position the notice was served only on 02.01.2015. Further even though the terms used is serve in the Section 111(1) it has to be covered in terms of statutory provisions cited supra. Even going by other actions namely issuance of show cause notice as well as pasting of notice on the factory premises etc. it would not amount to serving of the notice in view of various case laws cited by the appellant. Therefore the Department has clearly failed to serve the notice within the time limit permissible as per the provisions under Section 111 of Finance Act and therefore any subsequent proceedings including confirmation of demand on the basis of this show cause notice itself would not be maintainable and therefore the order is liable to be set aside. The appellants have contested the impugned order on two grounds namely that the show cause notice itself is time barred and secondly that there is no substantially false declaration made by them in the facts of the case and submissions made by them and therefore the impugned order is not maintainable - the show cause notice has not been served within the time limit prescribed under the provision under which the show cause notice has been issued. Since the show cause notice itself is non-maintainable the other ground taken by the appellant for non-maintainability of the impugned order not examined. Conclusion - i) No action shall be taken under Section 111 of the Finance Act 2013 after the expiry of one year from the date of declaration. ii) The show cause notice was not served within the statutory period rendering it time-barred. Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment was whether the show cause notice issued to the appellant was time-barred under Section 111 of the Finance Act 2013. Specifically, the issue was whether the notice was served within the statutory period of one year from the date of the declaration filed by the appellant under the Voluntary Compliance Encouragement Scheme (VCES), 2013.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The case primarily revolves around Section 111 of the Finance Act 2013, which stipulates that no action shall be taken after the expiry of one year from the date of the declaration under the VCES. Additionally, Section 37C of the Central Excise Act, 1944, which outlines the methods of serving notices, was also relevant. The appellant relied on precedents such as Margra Industries Ltd. and Trans Global Agencies Pvt Ltd. to support their contention that the notice was not served in compliance with statutory requirements.

Court's Interpretation and Reasoning

The Tribunal interpreted Section 111(2) of the Finance Act 2013 to mean that the one-year period for serving a notice begins from the date of the declaration. The Court found that the declaration was made on 31.12.2013, thus the one-year period expired on 30.12.2014. The Court reasoned that the notice, served on 02.01.2015, was beyond this period, rendering it time-barred.

Key Evidence and Findings

The Tribunal noted that the show cause notice was sent by registered post on 31.12.2014 and received by the appellant on 02.01.2015. Additionally, a copy of the notice was affixed to the appellant's premises on 31.12.2014. The Court found that the affixing of the notice was not a valid method of service under Section 37C, as there was no evidence that the notice could not be served by registered post.

Application of Law to Facts

The Tribunal applied Section 111(2) and concluded that the notice was not served within the statutory period. The Court also applied Section 37C and found that the method of service was not compliant with the prescribed procedure, as the notice was not initially attempted to be served by registered post before being affixed.

Treatment of Competing Arguments

The appellant argued that the notice was time-barred and not served in accordance with legal procedures. The respondent contended that the notice was served within the prescribed period and in compliance with legal requirements. The Tribunal favored the appellant's arguments, emphasizing the statutory requirement for timely service and proper procedure.

Conclusions

The Tribunal concluded that the show cause notice was time-barred and not served in compliance with statutory requirements. Consequently, the demand confirmed in the impugned order was deemed unsustainable.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Tribunal emphasized, "no action shall be taken under Section 111 of the Finance Act 2013 after the expiry of one year from the date of declaration."

Core Principles Established

The judgment reinforced the principle that statutory time limits for serving notices must be strictly adhered to, and that service must comply with prescribed legal procedures.

Final Determinations on Each Issue

The Tribunal determined that the show cause notice was not served within the statutory period, rendering it time-barred. The impugned order was set aside, and the appeal was allowed.