VCES declaration rejection fails where mandatory notice timelines are missed and the inquiry is only a roving document request.

VCES scheme circulars were treated as binding on the revenue, and the prescribed time limit for issuing notice proposing rejection of a filed declaration was held mandatory. Where the department's communication sought broad documents without linking them to any specific transaction, the inquiry was characterised as roving rather than particularised. On those facts, a show cause notice issued beyond the prescribed period could not sustain rejection, and the VCES declaration was held to be entitled to acceptance.

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Issues: Whether the rejection of the VCES declaration was sustainable when the show cause notice proposing rejection was issued beyond the time indicated in the departmental circular and the inquiry relied upon was alleged to be of a roving nature.

Analysis: The scheme circulars were treated as binding on the revenue, and the time limit for issuing notice proposing rejection was held to be mandatory in the context of declarations already filed. The communication relied upon by the department sought broad and general documents without linking them to any specific transaction or particularised inquiry, which supported the contention that the inquiry was of a roving nature. In these circumstances, the show cause notice issued after the prescribed period could not sustain rejection of the declaration.

Conclusion: The rejection of the VCES declaration was not sustainable and the assessee was entitled to acceptance of the declaration.

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