Voluntary compliance scheme immunity bars further proceedings where declared dues are paid and notice is not sustained.

A declaration filed under the Voluntary Compliance Encouragement Scheme, 2013, followed by full payment of the declared dues and no rejection or consequential communication by the Designated Authority within the prescribed time, gave the assessee immunity from penalty, interest and further proceedings. On that basis, the existing show cause notice could not survive because the tax liability had been discharged under the Scheme. The later period demand had also already been paid, and its appropriation was treated as a mere formality outside the scope of the notice. The CESTAT held the notice unsustainable and the demand could not be confirmed, deciding the matter in favour of the assessee.

---

---

Issues: Whether service tax dues voluntarily paid under the Voluntary Compliance Encouragement Scheme, 2013, entitled the assessee to immunity from further proceedings and justified dropping of the show cause notice.

Analysis: The assessee had filed a declaration under the Scheme, obtained acknowledgement, and paid the declared tax dues in full. The Designated Authority did not reject the declaration or issue the consequential communication within the prescribed time. In these circumstances, the Scheme operated to grant immunity from penalty, interest and other proceedings. Since the tax liability stood discharged under the Scheme, the show cause notice no longer survived. The demand for the later period was also already paid, and appropriation of the amounts was treated as an empty formality and beyond the scope of the notice.

Conclusion: The dropping of the demand and proceedings was ? Actually no, should be: The issue was decided in favour of the assessee and against Revenue; the show cause notice was held to be unsustainable and the demand could not be confirmed.

---