2019 (3) TMI 1434 - AT - Service Tax

Tribunal Upholds VCES Declarations, Pre-Enactment Payments Valid

The Tribunal allowed the appeal, directing acceptance of the VCES declarations made by the appellant. The decision emphasized that payments made before ... Rejection of VCES Scheme - rejection on the ground that the amount should have been paid after the enactment and payment before the date of enactment i.e., 10.5.2013 would take the amounts deposited by the appellant out of the scheme - Held that:- A similar issue came up before the Hon’ble High Court of Gujarat in the case of Sadguru Construction Co [2014 (5) TMI 219 - GUJARAT HIGH COURT]. The issue involved in that case was whether the amounts paid by the declarants under VCES before VCES came into statute by the Finance Act can be considered as amount paid towards VCES or otherwise. Their Lordships, after considering the entire scheme has held that the amounts paid before VCES came into existence can also be considered for as towards compliance of the declaration made. Appeal is allowed holding that VCES declarations made by the appellant be accepted. Issues:Rejection of Voluntary Compliance Encouragement Scheme (VCES) application based on payment timing.Analysis:The appeal challenged the rejection of the VCES application by the appellant due to the timing of payment. The appellant paid an amount before the VCES scheme came into existence, which was the basis for rejection by the adjudicating authority and the first appellate authority. They relied on a Board Circular to support their decision. However, a similar issue was addressed by the Hon'ble High Court of Gujarat in a previous case, where it was clarified that payments made before the enactment of VCES can be considered towards compliance. The High Court emphasized that the intention of the Legislature was not to exclude taxes paid before the scheme's framing, as long as they were not paid by a specific date. This interpretation was supported by another judgment from the High Court of Karnataka. Consequently, the Tribunal held that the impugned order was unsustainable and allowed the appeal, directing the acceptance of the VCES declarations made by the appellant.This judgment highlights the importance of interpreting statutory provisions in line with legislative intent and established legal principles. It underscores the significance of considering the specific language of the law and the purpose behind it when determining the applicability of schemes like VCES. The reliance on precedents set by High Courts in similar cases adds weight to the Tribunal's decision and ensures consistency in legal interpretation. The ruling serves as a reminder of the need for a comprehensive analysis of relevant legal provisions and judicial precedents to arrive at just and equitable decisions in matters of taxation and compliance schemes.