2018 (4) TMI 161 - AT - Service Tax

Voluntary Compliance Encouragement Scheme - rejection on the ground of failure to deposit the balance amount on or before December 31, 2014 - appellant applied for extension of the time limit, but there was no response and later on the scheme for applicant was rejected - Held that - While there can be no dispute about the fact that VCES Scheme, 2013 is in the nature of an Amnesty Scheme and its provisions have to be strictly interpreted and the time limit prescribed therein has to be strictly adhered to - However learned Advocate appearing for the appellant has drawn my attention to the provision of Section 110 of the scheme. In terms of the said section, it deals with a situation where a declarant fails to pay the tax dues, either fully or in part, as declared by him, such dues alongwith interest therein shall be recovered under the provisions of Section 87 of the chapter. Section 110 is a stand alone section and makes no reference to Section 107 (4) which only deals with a situation of non-payment of dues from 01/07/2014 to 31/12/2014. Section 110 deals with the situation where there is no payments even after 31/12/2014 - the applicability of the said Section 110 is required to be examined independently by the lower authorities, for which the matter is being remanded for re-consideration. Appeal allowed by way of remand.

Summary

Issues: Applicability of the Voluntary Encouragement & Compliance Scheme (VCES) for service tax liabilities, rejection of application under VCES for delayed balance payment, interpretation of Section 110 of the Finance Act, 1994 in relation to VCES, consideration of judicial precedents in similar cases.

Analysis:

1. The appellant, engaged in providing chartered accountant services, applied under the VCES declaring tax dues of ?32,45,200 for the period October 2007 to December 2012. The appellant deposited 50% of the dues before December 31, 2013, as required by the scheme. The Designated Authority issued an acknowledgment in the form of VCES-2. The appellant was required to pay the balance amount by December 31, 2014, but due to fund constraints, deposited it later in February, October, and November 2015.

2. The Original Adjudicating Authority rejected the application under VCES, directing the appellant to discharge tax liabilities with interest and penalty. The Commissioner (Appeals) upheld this decision, citing a Kerala High Court judgment. However, the Tribunal found that the appellant's delay in depositing the balance amount did not strictly adhere to the scheme's timeline.

3. The Tribunal noted that the VCES is an Amnesty Scheme, requiring strict interpretation and adherence to prescribed timelines. The appellant highlighted Section 110 of the scheme, which addresses situations where declared tax is not paid within the specified timeframe. This section allows for recovery of tax and interest under Section 87 of the Finance Act, 1994. The Tribunal observed that the lower authorities had not independently considered the applicability of Section 110 in the appellant's case.

4. Referring to a Supreme Court decision in a similar matter, the Tribunal allowed the appeal by remanding the case for reconsideration. The Tribunal emphasized the need for a thorough examination of Section 110's applicability and the Supreme Court's ruling in the context of the present case. The decision to remand the case was made to ensure a comprehensive review of all relevant legal aspects and precedents.

In conclusion, the Tribunal's judgment focused on the strict adherence to timelines under the VCES, the interpretation of Section 110 of the Finance Act, 1994, and the consideration of judicial precedents in similar cases. The appellant's appeal was allowed for remand to reevaluate the application of Section 110 and the Supreme Court decision, ensuring a fair and comprehensive review of the matter.