2019 (8) TMI 1373 - AT - Service Tax

Voluntary Compliance Entitlement Scheme (VCES SCHEME) - rejection of the scheme - short payment of service tax - false VCES declaration - it was noticed that the taxable value declared under ST-3 returns was substantially less than what was declared in the financial records and thereby an amount of ₹ 26,12,534/- of the service tax was found recoverable under Section 73 (1) of the Finance Act, 1994 - HELD THAT - The claim made by the appellant that part of the receipt for the financial year involving 2009-2010, 2010-2011, 2011-2012 and 2012-2013 also involved sales receipts on account of sale of software product, however, it is a matter of record that no details in the form of any invoice or sales tax/VAT/assessment return has been submitted by the appellant to substantiate their claim. It is also a matter of record that so far as the short payment of service tax for the financial year 2013-2014 is concerned, the appellant have admitted their liability and the short payment of the service tax has been deposited by them after issue of the show cause notice. The Department have enough evidence to prove that the VCES declaration made by the appellant for financial year 2009-2010, 2010-2011 has been substantially false as the appellant have not come clean in making a declaration before the Department about their actual service tax liability and therefore we feel that VCES declaration made by the appellant have correctly been rejected - the claims made by the appellant that part of receipts pertains to sale of software product has also not been substantiated by the appellant by adducing the requisite evidences in the forms of invoices or VAT/sales tax returns etc. and therefore we feel that the findings given in impugned order-in-original are legally sustainable. Appeal dismissed - decided against appellant.

Issues:
1. Declaration under Voluntary Compliance Encouragement Scheme (VCES) for service tax liability.
2. Alleged misdeclaration of service tax liability for financial years 2009-2014.
3. Short payment of service tax for various financial years.
4. Department's show cause notice for recovery of short payment.
5. Adjudication of the matter by the learned Adjudicating Authority.
6. Appeals against the order-in-original.
7. Substantial falsity of VCES declaration and lack of evidence for sales receipts.

Analysis:

Issue 1: Declaration under Voluntary Compliance Encouragement Scheme (VCES)
The appellant voluntarily declared service tax liability under VCES for the financial years 2009-2011, depositing the short payment in two installments within the specified time frame. However, a subsequent audit raised concerns about the accuracy of the declaration, leading to a show cause notice for recovery.

Issue 2: Alleged misdeclaration of service tax liability
The Department alleged that the appellant misdeclared taxable values for various financial years, resulting in substantial short payments of service tax. The discrepancies were identified through a comparison of ST-3 returns with financial records, leading to demands for additional tax payments.

Issue 3: Short payment of service tax
Specific instances of short payment were highlighted by the audit, including cases where the admitted service tax payable was not fully deposited by the appellant, leading to demands for recovery of the outstanding amounts.

Issue 4: Department's show cause notice
Based on the audit findings, the Department issued a show cause notice demanding payment of outstanding service tax amounts along with applicable interest under the Finance Act, 1994. The matter was adjudicated by the Adjudicating Authority through an order-in-original.

Issue 5: Adjudication of the matter
The Adjudicating Authority confirmed the charges as leveled in the show cause notice, ordering the recovery of service tax amounts, imposition of interest, and penalties for contravention of relevant provisions. The Authority's decision was based on the evidence and arguments presented during the proceedings.

Issue 6: Appeals against the order-in-original
The appellant contested the findings, arguing that the Department failed to establish the substantial falsity of the VCES declaration and provide concrete evidence to support their claims. The appellant also disputed the calculation of short payments, citing the inclusion of sales revenue from software products in the taxable value.

Issue 7: Substantial falsity of VCES declaration and lack of evidence for sales receipts
The Tribunal upheld the order-in-original, noting that the Department had sufficient evidence to prove the substantial falsity of the VCES declaration. The appellant's claims regarding sales receipts were deemed unsubstantiated due to the lack of supporting documentation, leading to the dismissal of the appeal.

In conclusion, the Tribunal found no infirmity in the impugned order-in-original and upheld the decision, emphasizing the importance of accurate declarations and supporting evidence in tax compliance matters.

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