2018 (3) TMI 931 - HC - Service Tax

Condonation of delay in making payment of tax - Voluntary Compliance Encouragement Scheme, 2013 (VCES) - It is claimed in this affidavit that the petitioners cannot insist on the delay being condoned, because the scheme is not open ended - Held that - a proviso was provided to sub-section (4) of section 107 and which enables the person, who fails to pay said tax dues or part thereof on or before the said date, namely, 30th June, 2014, to pay the same on or before 31st day of December, 2014 along with interest thereon at such rate as is fixed under section 75 or, as the case may be, section 73B of the Chapter for the period of delay starting from the 1st day of July, 2014. Thus, this was a concession or relaxation given, but not without condition. There was a condition, namely, to pay interest and within the outer time limit. This is not an open ended scheme. The benefits thereunder cannot be derived dehors the scheme or after its life or duration has come to an end. The relaxation or concession, which can be granted in terms of the scheme have been outlined in the scheme itself and particularly by sub-section (4) of section 107. It is not the intent that the tax dues for the period 1st October, 2007 and ending on 31st December, 2012 and the liability in that behalf can be discharged in the manner chosen by the assessee or as per his whims and fancies. Equally, the Revenue and its department cannot, by its whims and fancies, allow any defaulter to pay the taxes after the due date is over long time back. The plain duty of the departmental officials is to assess the tax payable and within the period prescribed by the statute. Any such scheme would not enable the authorities to extend the period of compliance stipulated by law and defer the tax liability indefinitely. It is not expected of them to show undue favour dehors the statute. The petitioners have to blame themselves and they cannot take advantage of their own wrong and force the respondents to accept the further sums in full and final settlement contrary to the stipulations and provisions in the scheme. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Legality and validity of the impugned communication dated 29th December 2016.
2. Compliance with the Voluntary Compliance Encouragement Scheme (VCES), 2013.
3. Power to condone delay in payment under the VCES, 2013.
4. Interpretation of Section 107 of the Finance Act, 2013.
5. Applicability of judgments from other High Courts.

Detailed Analysis:

1. Legality and Validity of the Impugned Communication:
The petitioners sought a writ of certiorari to quash the impugned communication dated 29th December 2016, which declared their ineligibility under the VCES, 2013. The communication noted that the petitioners failed to make the mandatory balance payment of ?27,51,696/- along with interest before 31st December 2014, as required under Proviso 4 of Section 107 of the Finance Act, 2013.

2. Compliance with the Voluntary Compliance Encouragement Scheme (VCES), 2013:
The petitioners, a company and its directors, claimed they did not pay service tax from October 2007 to December 2012 due to oversight. They applied for the VCES, 2013, which is an amnesty scheme encouraging voluntary payment of service tax. Their application was initially rejected but later accepted by the Assistant Commissioner of Service Tax after determining that there was no inquiry, investigation, or audit pending as of 1st March 2013.

3. Power to Condon Delay in Payment under the VCES, 2013:
The petitioners argued that the delay in the last two payments was due to miscommunication with their Chartered Accountant and should be condoned. However, the respondents contended that the scheme did not allow for condonation of delay beyond the specified dates. The court agreed with the respondents, stating that the scheme is not open-ended and does not provide for discretionary condonation of delay.

4. Interpretation of Section 107 of the Finance Act, 2013:
Section 107 outlines the procedure for making declarations and payments under the VCES, 2013. Sub-section (4) and its proviso specify that any remaining tax dues must be paid by 30th June 2014, with a further extension to 31st December 2014, subject to interest. The court held that this provision is clear and does not allow for any further extension or condonation of delay.

5. Applicability of Judgments from Other High Courts:
The petitioners relied on judgments from the Punjab and Haryana High Court and the Madras High Court, which allowed for condonation of delay in similar schemes. However, the court distinguished these cases on facts and held that the VCES, 2013, does not provide for such condonation. The court also referred to a judgment by the High Court of Jharkhand, which was upheld by the Supreme Court, rejecting the argument for condonation of delay under the VCES, 2013.

Conclusion:
The court dismissed the writ petition, holding that the petitioners were not entitled to any relief as they failed to comply with the mandatory payment deadlines under the VCES, 2013. The court emphasized that the scheme's provisions are clear and do not permit any discretionary extension of time for payment. The petitioners' argument for condonation of delay was rejected, and the impugned communication was upheld.