2016 (4) TMI 289 - AT - Service Tax

Entitlement for the benefit of VCES Scheme notified under Finance Act, 2013 - Respondent applied for registration, obtained assessee code number and attempted to deposit 50% amount on 31/12/2013 however due to system fault the amount could not be deposited and report is on record which shows that assessee code invalid - Held that - it is observed that on 31/12/2013 respondent s bank account in IDBI bank shows credit balance of more than 50% amount which was to be deposited. In view of this, respondent has scrupulously followed the procedure and complied with condition i.e. applied for registration and attempted to deposit the amount on the due date i.e. 31/12/2013 but only due to system fault online, the respondent could not deposit the amount which is beyond their control. Therefore, it can be construed that there is no delay on the part of the respondent, hence though the payment finally made on 01.01.2014 the same can be treated as if, payment was made on 31/12/2013. - Decided against the revenue

Summary

Issues:
1. Interpretation of the VCES Scheme, 2013 regarding the mandatory deadline for depositing 50% of declared tax dues.
2. Application of the judgment in the case of Teknow Overseas Ltd. vs. Asst. Commissioner of Service Tax (VCES), Delhi.
3. Consideration of system failure as a valid reason for delay in payment.

Analysis:

1. The appeal involved the interpretation of the VCES Scheme, 2013, specifically regarding the mandatory deadline for depositing 50% of the declared tax dues. The respondent had applied for the scheme on 31/12/2013 but faced system issues while attempting to deposit the amount by the deadline of 31/12/2013. The Adjudicating authority contended that the respondent did not comply with the deadline and thus was not entitled to the scheme benefits.

2. The Revenue appellant argued that the deadline of 31/12/2013 for payment was mandatory as per the statute and could not be extended. They relied on the judgment of the Hon'ble Delhi High Court in the case of Teknow Overseas Ltd. to support their position. The Revenue contended that since the respondent paid the 50% dues only on 01/01/2014, they did not fulfill the condition of payment by the stipulated deadline.

3. The respondent, on the other hand, contended that the judgment of the Delhi High Court was not directly applicable to the present case due to differing facts. They highlighted that the system failure prevented them from depositing the amount on time, despite their attempts to comply with the deadline. The respondent argued that they had applied for registration and made genuine efforts to pay on time, but the technical issue hindered the transaction.

4. After considering the submissions from both parties, the Tribunal analyzed the facts of the case. The Tribunal noted that the respondent had applied for registration, obtained the assessee code, and attempted to deposit the amount on the due date. However, due to a system fault, the transaction could not be completed, leading to the delay in payment. The Tribunal observed that the respondent had the necessary funds in their bank account on the due date, indicating their willingness to comply.

5. The Tribunal distinguished the present case from the Teknow Overseas Ltd. judgment, emphasizing that the respondent did not intentionally seek an extension or avoid payment by the deadline. Due to the uncontrollable system failure, the Tribunal considered the delay as beyond the respondent's control. Therefore, the Tribunal concluded that the respondent had acted diligently and upheld the Commissioner (Appeals)'s decision in favor of the respondent.

6. Ultimately, the Tribunal found that the impugned order was legal and appropriate, requiring no intervention. The Tribunal upheld the decision in favor of the respondent and dismissed the appeal of the Revenue, emphasizing the unique circumstances of the case and the respondent's genuine attempts to comply with the scheme's requirements.