2019 (11) TMI 614 - AT - Service Tax

Voluntary Compliance Encouragement Scheme - the condition of payment of 50% of the declared tax dues under the scheme not fulfilled - section 107 (3) of the Finance Act, 2013 - whether the VCS- 1 application filed by the appellant have been rightly refused observing that they have declared tax dues for the period October, 2007 to December, 2012, for not satisfying/ fulfilling the condition of payment of 50% of the declared tax dues under the scheme, on or before 31st December, 2013 as stipulated under section 107 (3) of the Finance Act, 2013? HELD THAT - There have been a clerical error on the part of the appellant in filling up the form VCES-1 properly, as already aforementioned. Accordingly, I hold that the substantial benefit should not be disallowed for venial mistake of clerical nature. Moreover, in the calculation sheet annexed to form VCES-1, the amount of tax dues under the scheme is evident at ₹ 9,93,480/-. The appellant had paid 50% of tax dues correctly. In this view of the matter the rejection their Form VCES-1 is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the VCS-1 application filed by the appellant was rightly refused for not satisfying the condition of payment of 50% of the declared tax dues under the scheme by the stipulated date.

Analysis:

The judgment revolves around the issue of whether the appellant's VCS-1 application was correctly rejected due to the failure to meet the payment condition under the Service Tax Voluntary Compliance Encouragement Scheme, 2013. The appellant had declared tax dues amounting to ?10,13,623 for the period October 2007 to December 2012 but had deposited only 50% of the correct amount of ?9,93,480 by the specified date. A show cause notice was issued, and the application was rejected for short payment of tax dues under the scheme. The appellant appealed to the Commissioner (Appeals) who also dismissed the appeal, leading to the matter being brought before the Tribunal.

Upon examination of the VCS-1 form and the calculation of tax dues, it was found that the appellant had made a clerical error by declaring the total tax dues as ?10,13,623 instead of the correct amount of ?9,93,480. The Tribunal held that the clerical mistake should not result in the substantial benefit being denied to the appellant. The calculation sheet attached to the form clearly showed the correct tax dues amount. Therefore, the Tribunal concluded that the appellant had indeed paid 50% of the tax dues correctly, and the rejection of their VCS-1 form was unjustified. Consequently, the Tribunal allowed the appeal, setting aside the rejection of the application and entitling the appellant to consequential benefits as per the law.

In summary, the judgment highlights the importance of accurate documentation and the impact of clerical errors on the application process under the Service Tax Voluntary Compliance Encouragement Scheme, 2013. The Tribunal emphasized that minor mistakes should not lead to the denial of benefits under such schemes, especially when the correct payment has been made. The decision serves as a reminder for authorities to consider the substance of compliance rather than technical errors in such cases.