2014 (11) TMI 929 - HC - Service Tax

Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Request for rectification / amendment in the declaration - It is contended that the petitioner in the declaration filed before the Service Tax Authorities sought to declare the amount of ₹ 3.87 crores. In terms of its understanding, it claimed credit for the sum of ₹ 81,35,729/- deposited by it earlier, i.e., prior to March, 2013. It also sought to seek credit for the sum of ₹ 1,18,00,000/- paid between 18th March, 2013 and 10th July, 2013, in compliance of Section 107(3). The Service Tax Authorities however refused to accept the declaration, taking the position that the credit claimed in respect of the earlier sum paid up to 18-3-2013 was based upon a wrong understanding of the provisions relating to the scheme. The tax authorities also held, consequently, that in the absence of 50% deposit under Section 107(3) the application could not be entertained and proceeded with. Held that - The authorities have not been given any discretion in the matter of grant of extension of time to make initial pre-deposit of 50% of the declared amount. In fact, the consequences are spelt out for failure to pay the tax dues under Section 110. In these circumstances the claim in the petition for a direction to extend the period or alternatively for deleting the sum of ₹ 81 lakhs from the declaration already filed cannot be granted. - Decided against assessee.

Summary

Issues:
1. Interpretation of Section 106 and 107 of the Finance Act, 1994 under the "Service Tax Voluntary Compliance Encouragement Scheme, 2013."
2. Validity of the petitioner's declaration and credit claims for Service Tax dues.
3. Requirement of initial 50% deposit under Section 107(3) for consideration under the scheme.
4. Discretion of authorities in granting extension for initial pre-deposit.
5. Relief available under the scheme for rectification of mistakes in the declaration.

Analysis:

1. The judgment dealt with the interpretation of Section 106 and 107 of the Finance Act, 1994, specifically under the "Service Tax Voluntary Compliance Encouragement Scheme, 2013." The scheme aimed to provide a window for service providers to voluntarily disclose their tax liabilities. The Court highlighted the self-contained nature of the scheme, emphasizing the importance of fully disclosing tax dues and making necessary deposits for immunity from penalties and interest.

2. The petitioner sought to declare Service Tax dues under the scheme but faced challenges with the credit claims for amounts paid earlier. The tax authorities rejected the declaration due to discrepancies in the claimed credits. The Court noted the importance of accurate declarations and upheld the authorities' decision to refuse the application based on incorrect credit claims.

3. A key issue addressed was the requirement of an initial 50% deposit under Section 107(3) for consideration under the scheme. The petitioner argued for flexibility in the deposit timeline, citing the provision for balance payment in instalments. However, the Court emphasized the mandatory nature of the initial deposit, crucial for availing benefits under the scheme.

4. The judgment discussed the discretion of authorities in granting extensions for the initial pre-deposit. It was noted that the scheme did not provide for such discretion, and consequences were outlined for failure to comply with payment deadlines. The Court highlighted the lack of provisions allowing for extensions, reinforcing the importance of timely deposits.

5. Lastly, the Court addressed the relief available under the scheme for rectifying mistakes in declarations. The petitioner sought to exclude a specific amount from the declaration, but the Court held that the scheme did not permit such amendments post-filing. The judgment clarified that the scheme's provisions did not allow for alterations once declarations were submitted.

In conclusion, the judgment emphasized the strict adherence to the provisions of the Service Tax Voluntary Compliance Encouragement Scheme, highlighting the significance of accurate declarations, timely deposits, and the limited scope for rectifications post-filing.