2016 (7) TMI 560 - HC - Service Tax

Failure to deposit first installment of 50% under the VCES, 2013 (Voluntary Compliance Encouragement Scheme, 2013) - the immunity provided under section 108(1) of the Finance Act, 2013 was withdrawn, as this petitioner has not deposited 50% of the tax dues so declared under Section 107(1) and submitted the proof of such payment to the designated authority. - Held that - so far as the payment of first instalment is concerned, which was minimum 50% of the tax dues so declared was to be paid on or before 31st December, 2013 and there is no provision under the VCES, 2013 for relaxation in the payment of first instalment. So far as second instalment is concerned, it was to be paid on or before 30th June, 2014. However, there is slight leniency in the payment of second instalment, viz. if the second instalment is not paid before 30th June, 2014, the declarant can make the payment on or before 31st December, 2014, but, with interest. Thus, this petitioner-declarant has committed a breach of section 107(3) of the VCES, 2013 in making the payment of first instalment and hence, he is not entitled to get the benefits provided under this scheme. Application was rightly rejected - Writ petition dismissed. - Decided against the assessee.

Issues Involved:
1. Disqualification from the Voluntary Compliance Encouragement Scheme, 2013 (VCES, 2013)
2. Withdrawal of immunity under Section 108(1) of the Finance Act, 2013
3. Interpretation of VCES, 2013 provisions
4. Alleged discrimination against the petitioner
5. Jurisdiction of the court under Article 226 of the Constitution of India

Issue-wise Detailed Analysis:

1. Disqualification from the Voluntary Compliance Encouragement Scheme, 2013 (VCES, 2013):
The petitioner challenged the order dated 7th April, 2014, by the Assistant Commissioner, Central Excise and Service Tax, Division-IV, Jamshedpur, which disqualified the petitioner from VCES, 2013. The petitioner had declared Service Tax liabilities amounting to ?3,48,39,667/- for the period from October 2007 to December 2012 and was required to deposit 50% of this amount by 31st December, 2013. The petitioner deposited ?1,14,20,000/- by the deadline and provided a post-dated cheque for ?60,00,000/-, which was encashed on 5th February, 2014. The court noted that the petitioner did not meet the requirement of depositing 50% of the tax dues by 31st December, 2013, as mandated by Section 107(3) of the Finance Act, 2013, thereby violating the scheme’s provisions.

2. Withdrawal of immunity under Section 108(1) of the Finance Act, 2013:
The immunity provided under Section 108(1) of the Finance Act, 2013, was withdrawn due to the petitioner’s failure to fulfill the requirements of Section 107(3). The court upheld this withdrawal, emphasizing that the petitioner did not comply with the mandatory timeline for the payment of at least 50% of the declared tax dues by 31st December, 2013.

3. Interpretation of VCES, 2013 provisions:
The petitioner argued for a lenient and liberal interpretation of VCES, 2013, citing substantial compliance and no mala fide intention. However, the court rejected this argument, stating that VCES, 2013, is already a liberal scheme designed to encourage voluntary compliance. The court emphasized that the scheme’s provisions, especially Section 107, are clear and unambiguous, and a strict interpretation is necessary to maintain the integrity of the scheme. The court also noted that further leniency beyond what is provided in the scheme is not permissible under Article 226 of the Constitution of India.

4. Alleged discrimination against the petitioner:
The petitioner claimed discrimination, alleging that other assessees who deposited the first installment after 31st December, 2014, were not issued notices. The court dismissed this claim, stating that there can be no equality in illegality. The court emphasized that any errors committed by the department in other cases do not entitle the petitioner to similar benefits if the scheme’s provisions were violated.

5. Jurisdiction of the court under Article 226 of the Constitution of India:
The court highlighted that it would be extremely slow and careful in making further liberal interpretations of VCES, 2013, as it is not sitting in appeal against the scheme nor can it replace an existing scheme with a better one. The court reiterated that it cannot change the clauses of VCES, 2013, nor can it provide further installments for the payment of dues beyond what is stipulated in the scheme.

Conclusion:
The court found no grounds to entertain the writ petition, as the petitioner failed to comply with the mandatory provisions of VCES, 2013, specifically Section 107(3). The order dated 7th April, 2014, by the Assistant Commissioner, Central Excise and Service Tax, Division-IV, Jamshedpur, was upheld, and the writ petition was dismissed. The court also disposed of the associated Interlocutory Application No. 1059 of 2015 in light of the dismissal of the writ petition.

← Previous Next →