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2017 (7) TMI 990 - AT - Service TaxVCES declaration - the appellant case is that they had mistakenly applied the rate of tax at 10%, instead of the prescribed rate of 12%. He further submits that the differential amount of service tax was paid along with interest suo moto and thus, the VCES declaration filed by it was true to the extent of 99.87% - Held that - since the value declared in the VCES declaration was true to the extent of 99.87%, it cannot be said that such declaration is substantially false for denial of the benefit provided under the VCES Scheme. Thus, in terms of the CBEC Circular No.170/5/2013-ST, dated 08.08.2013, there was no requirement of issuance of any show cause notice, seeking confirmation of the adjudged demand. It is not the case of Revenue that the appellant otherwise is not entitled for availing the benefits contained in the VCES Scheme. Thus, denial of the benefits contained therein for a technical lapse is not proper and justified. Appeal allowed - decided in favor of appellant.
Issues:
1. Calculation of service tax liability at incorrect rate. 2. Validity of VCES declaration. 3. Rejection of VCES application. Analysis: 1. The appellant, a manufacturer of sponge iron, availed services of Goods Transport Agencies and discharged service tax under reverse charge mechanism. The appellant failed to pay service tax on GTA services due to financial constraints. After discrepancies were pointed out by the Audit Wing, the appellant filed a VCES declaration, declaring the gross value of goods and service tax dues. The department issued a show cause notice alleging short payment by the appellant. The Ld. Commissioner confirmed a duty demand against the appellant and imposed penalties under Sections 77 and 78 of the Finance Act, 1994. 2. The appellant contended that the service tax liability was mistakenly computed at 10% instead of the prescribed 12%. The differential amount was paid along with interest, making the VCES declaration true to 99.87%. The appellant relied on a CBEC Circular and a Supreme Court judgment to support the claim that a declaration should be considered false only if non-compliance exceeds 50%. 3. The Revenue, represented by the Ld. DR, supported the findings in the impugned order. Referring to a Delhi High Court judgment, it argued that as there were no provisions in the VCES Scheme to correct errors in the declaration, rejection of the VCES application and confirmation of the demand were in line with statutory provisions. 4. After hearing both sides and examining the records, the Tribunal noted that no show cause proceedings were initiated for the recovery of the unpaid service tax. The difference between the declared value and the actual value was minimal, attributed to a clerical error. As the declared value was true to a high extent, the Tribunal found no substantial falsity in the declaration, in line with CBEC Circular No.170/5/2013-ST. Denying benefits under the VCES Scheme for a technical lapse was deemed improper and unjustified. 5. Consequently, the Tribunal found no merit in the impugned order and allowed the appeal in favor of the appellant, setting aside the decision of the Ld. Adjudicating Authority.
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