Court dismisses writ petition challenging VCES denial due to minor payment delay. Strict compliance with scheme required.

The court dismissed the writ petition challenging a communication under the Voluntary Compliance Encouragement Scheme, 2013 (VCES). The petitioner's delay in paying the second tranche of tax dues by six days led to the denial of the scheme's benefit. The court held that strict adherence to VCES provisions was necessary, as it represented a settlement between the assessee and the department. Despite the petitioner's compliance with the first payment, the minor delay breached the scheme's terms, preventing the petitioner from claiming benefits.

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Issues:
Challenge against Ext.P6 communication under Voluntary Compliance Encouragement Scheme, 2013 - Denial of Scheme benefit due to delayed payment - Interpretation of VCES Scheme, 2013 provisions - Strict construction in favor of revenue or assessee.

Issue 1: Challenge against Ext.P6 communication under VCES, 2013

The petitioner challenged Ext.P6 communication by the 2nd respondent, stating that due to a delayed payment under the VCES Scheme, the petitioner would be denied the scheme's benefit and recovery of service tax dues for April 2008 to March 2015 would be enforced. The petitioner paid 50% of the tax dues on time but the remaining 50% with interest was paid six days late. The contention was that this slight delay should not result in the denial of the scheme's substantive benefit.

Issue 2: Interpretation of VCES Scheme, 2013 provisions

The court analyzed whether the petitioner could be denied the scheme's benefit entirely due to a mere six-day delay in paying the balance 50% under the VCES Scheme, 2013. The petitioner argued that exemption provisions under taxing statutes should be strictly construed against the assessee but broadly interpreted once entitlement is established. In contrast, the respondents contended that the VCES Scheme, 2013, being an Amnesty Scheme, should be strictly interpreted in favor of the revenue and against the assessee.

Analysis:

The court acknowledged the petitioner's compliance with the first tranche payment but noted the delay in paying the second tranche beyond the specified date. It determined that the VCES Scheme, 2013, being an Amnesty Scheme, required strict adherence to its provisions, especially regarding payment timelines. The court emphasized that the scheme represented a settlement between the assessee and the department, with both parties bound by its terms. Allowing belated payments would alter the settlement terms, which the court could not permit under its constitutional powers. Despite the minor delay of six days, the petitioner failed to pay even before the extended deadline, leading to the conclusion that the petitioner could not claim the scheme's benefit. Consequently, the writ petition was dismissed.

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