Voluntary Compliance Scheme declaration barred by prior show-cause notice and confirmed demand for the same tax liability

A declaration under the Voluntary Compliance Encouragement Scheme was not maintainable where the assessee had already received a show-cause notice and a confirmed demand for the same service tax liability. The exclusionary conditions in Section 106 of the Finance Act, 2013 were applied as written, and a later declaration could not be entertained merely because part payment had been made. The cited decision was held inapplicable on the facts, and the departmental clarification could not override the statutory bar. The rejection of the declaration was therefore sustained.

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Issues: Whether the declaration filed under the Voluntary Compliance Encouragement Scheme was liable to be rejected on account of disqualification arising from a prior show-cause notice and confirmed demand for the same service tax category.

Analysis: The scheme was held to operate within the framework of the Finance Act, 1994 and the exclusionary conditions in Section 106 of the Finance Act, 2013 had to be applied as written. The record showed that a show-cause notice had already been issued for the relevant service tax period and the demand had been confirmed in adjudication. On those facts, the declaration fell within the disqualifying condition contained in Section 106, and the later declaration could not be entertained merely because part-payment had been made. The cited decision was found inapplicable on the facts, and the departmental clarification did not override the statutory bar.

Conclusion: The declaration was correctly rejected, and the rejection was upheld against the assessee.

Final Conclusion: The appeal failed because the statutory bar under the scheme applied, and the impugned order rejecting the declaration was sustained.

Ratio Decidendi: A declaration under the Voluntary Compliance Encouragement Scheme is not maintainable where the declarant is hit by the statutory exclusion for a prior pending inquiry, investigation, or confirmed demand relating to the same tax liability.

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