2016 (1) TMI 825 - AT - Service Tax

Tribunal rules inquiry by DGCEI did not meet requirements for rejecting appellant's declaration under Finance Act.

M/s LV Construction & Company Versus Commissioner Of Customs, Central Excise & Service Tax, Nagpur-II

The Tribunal allowed the appeals, ruling that the inquiry initiated by DGCEI did not meet the requirements of Section 106(2)(a) for rejecting the ... Rejection of VCES-I declaration - it was submitted that the inquiry initiated by the DGCEI is of roving nature as general inquiry was made from various other assessees also - Held that:- against both the appellants the DGCEI issued letter dated 17/1/2013 and 19/2/2013 asking for some information and documents related to their taxable activity. In the said letter it was mentioned that information is called for under Section 14 of the Central Excise Act, 1944. Board circular No. 170/5/2013-ST dated 8/8/2013 and No. 174/9/2013-ST dated 25/11/2013 clarified the same issue - From the above clarification, it is clear that if the information is sought of roving nature even though communication regarding seeking information quoted Section 14 which shall not attract provisions of Section 106(2)(a). The cases of the appellants are squarely covered under the above clarification - Board Circular binding on the departmental officers. - The Ld. Adjudicating authority should have accepted the declaration filed by the appellants - VCES declaration cannot be rejected - Decided in favor of assessee. Issues:Appeal against rejection of declaration under Section 111 of Finance Act, 2013 based on pending inquiry initiated by DGCEI despite VCES-I declaration filed by the appellant.Analysis:1. The appellant filed a VCES-I declaration form as per Notification No. 10/2013-ST dated 13/5/2013, verifying no pending inquiry as of 1st March 2013. However, the Revenue issued a show cause notice proposing rejection due to an inquiry initiated by DGCEI before the said date. The Ld. Commissioner rejected the application, leading to the appeal.2. The appellant's counsel argued that the inquiry by DGCEI was of a roving nature and not specific, citing Board Circular No. 170/5/2013-ST dated 8/8/2013, which clarified that roving inquiries quoting Section 14 do not fall under Section 106(2)(a). The counsel emphasized that the inquiry did not meet the exclusion criteria under Section 106(2).3. The Revenue contended that the inquiry by DGCEI was under Section 14 of the Central Excise Act, making the declaration liable for rejection under Section 106(2)(a). They relied on the judgment of Sadguru Construction Co & 1 Vs. Union of India & 2, stating that any pending inquiry for non-payment of service tax dues on 1/3/2013 warrants rejection of the declaration.4. The Tribunal noted that the DGCEI's inquiry letters quoted Section 14 but were of a roving nature, similar to inquiries made to other assesses. Board Circulars No. 170/5/2013-ST and No. 174/9/2013-ST clarified that such inquiries quoting Section 14 do not trigger Section 106(2)(a). The Tribunal cited various judgments supporting the binding nature of Board Circulars on departmental officers.5. The Tribunal distinguished the judgment relied upon by the Revenue, stating it pertained to a different issue. In light of the Board instructions and precedent judgments, the Tribunal concluded that the inquiry initiated by DGCEI did not align with Section 106(2)(a) requirements. Consequently, the rejection of the appellant's declaration was deemed unsustainable, and the appeals were allowed.