2017 (2) TMI 1074 - HC - Service Tax

VCES Scheme - rejection on the ground that petitioner filed the VCES declaration despite knowing the fact that the SCN to them has been issued for the Works Contract service and by virtue of Section 106(1) of the Finance Act, 2013 - Held that - petitioner submitted a declaration form in which he had wrongly declared that no inquiry or investigation or audit is pending against him which is a basic disqualification to avail the benefit of the Scheme, therefore, by virtue of Section 106 the declaration submitted by the petitioner was liable to be rejected - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Eligibility of the petitioner to avail the Service Tax Voluntary Compliance Encouragement Scheme (VCES), 2013.
2. Validity of the show cause notice issued by the respondents.
3. Jurisdiction and applicability of Section 106 and Section 101 of the Finance Act, 2013.
4. Availability of alternative remedies for the petitioner.

Issue-Wise Detailed Analysis:

1. Eligibility of the petitioner to avail the Service Tax Voluntary Compliance Encouragement Scheme (VCES), 2013:

The petitioner engaged in construction services declared tax dues under VCES, 2013, and made partial payments. However, the respondents issued a show cause notice rejecting the declaration on the grounds that a prior show cause notice had already been issued for the same category and period. The petitioner argued that the VCES declaration was valid as no notice was issued for the period covered by the declaration. The court examined Section 106(1) of the Finance Act, 2013, which states that no declaration can be made if a notice or order of determination has already been issued for the same issue for any subsequent period. The court found that the petitioner had wrongly declared no pending inquiry or investigation, thus disqualifying them from availing the scheme under Section 106.

2. Validity of the show cause notice issued by the respondents:

The petitioner contended that the show cause notice issued on 17-9-2014 was invalid as it was beyond the normal period of one year from the date of declaration. However, the court noted that the petitioner had already been issued a show cause notice on 16-4-2012 for the period from 1-6-2007 to 31-3-2010. The court held that the issuance of the prior notice disqualified the petitioner from making a declaration under VCES for any subsequent period, as per the second proviso of Section 106(1).

3. Jurisdiction and applicability of Section 106 and Section 101 of the Finance Act, 2013:

The petitioner argued that under Section 111(1) of the Finance Act, no action could be taken after one year from the date of declaration. The court clarified that Section 101 pertains to situations where the declaration is found to be substantially false, allowing the Commissioner to issue a notice within one year. In contrast, Section 106 deals with eligibility criteria for availing the scheme. Since the petitioner had a prior notice and pending inquiry, Section 106 applied, making the petitioner ineligible for the scheme. The court upheld the respondents' rejection of the declaration under Section 106.

4. Availability of alternative remedies for the petitioner:

The respondents argued that the petitioner had an alternative remedy of appeal against the impugned order and that the writ petition under Article 226 of the Constitution was not maintainable. The court noted that the petitioner had indeed challenged the show cause notice and the final order before the Commissioner (Appeals), which was still pending. The court emphasized the availability of alternative remedies and found no substance in the writ petition.

Conclusion:

The court dismissed the writ petition, upholding the respondents' rejection of the VCES declaration under Section 106 of the Finance Act, 2013. The court emphasized that the petitioner was ineligible for the scheme due to the prior show cause notice and pending inquiry, and alternative remedies were available for the petitioner.