2018 (4) TMI 974 - AT - Service Tax

Voluntarily Compliance Encouragement Scheme 2013 - rejection of declaration on the ground that there is no power vested with the authorities for weaving or relaxing the condition of payments stipulated under Section 107 of the Finance Act 2013 for obtaining the benefits provided therein - Held that - It is an admitted fact on record that the appellant did not comply with the conditions provided in the VCES 2013 inasmuch as the tax due alongwith interest was not deposited within the stipulated time frame provided therein. Since the authorities functioning under the statue are guided by the dictates under the statue they cannot interpret the provisions of the statutory scheme differently in order to relax the conditions prescribed in the scheme - rejection of the VCES declaration upheld. Demand of interest - Held that - Since the retrospective Validation amendment to levy the service tax on the taxable service on renting of immovable property was introduced by the Finance Act 2010 w.e.f 01.07.2010 the interest demand should only be confined to the date of introduction of such levy i.e. 01.07.2010 - the interest charged by the designated authorities from 01.06.2007 cannot be sustained and the appellant will be liable to pay interest only from 01.07.2010. Appeal allowed in part.

Summary

Issues:
Rejection of declaration under Voluntarily Compliance Encouragement Scheme, 2013 (VCES) and liability for interest on delayed service tax payment.

Analysis:
The appeal challenged the rejection of a declaration filed under the Voluntarily Compliance Encouragement Scheme, 2013 (VCES) due to non-compliance with payment conditions. The appellant rented commercial premises, a taxable service falling under "Renting of Immovable Property Service," and opted for settlement under VCES. The appellant deposited a partial amount and filed the VCES-1 declaration seeking immunities like waiver on interest, penalties, and prosecution. However, the remaining 50% of Service Tax due was not deposited within the specified time frame, leading to rejection of the declaration by the designated authority. The appellant contended that VCES does not provide for rejection in case of default in payment timing and argued for interest liability from the introduction of the Finance Act, 2010, not from 01.06.2007. The Revenue supported the rejection based on the lack of authority to relax VCES payment conditions.

The Tribunal held that non-compliance with VCES payment conditions justified rejection of the declaration. Authorities cannot interpret statutory scheme provisions differently to relax payment conditions. Therefore, the rejection was upheld due to the failure to pay dues within the stipulated time frame. Regarding interest liability, the Tribunal noted that the interest demand from 01.06.2007 was not justified as the retrospective Validation amendment for service tax on renting of immovable property was effective from 01.07.2010. Citing the Supreme Court judgment in Star India Pvt. Ltd. case, the Tribunal ruled that interest could only be charged from the date of introduction of the levy. Consequently, the appellant was held liable for interest only from 01.07.2010, not from 01.06.2007. The appeal was partly allowed in favor of the appellant on the interest payment issue but the rejection of the VCES declaration was sustained.

In conclusion, the appeal was disposed of with the decision to hold the appellant liable for interest from the enactment of the Finance Act, 2010, and not from 01.06.2007 as claimed by the Revenue. The rejection of the VCES declaration was upheld, emphasizing the importance of complying with payment conditions under the statutory scheme.