TaxTMI 
TaxTMI 
2026 (2) TMI 531
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.... of Rs.39,63,652/- for the period from April 2010 to December 2012, on account of non-payment of service tax. On verification of records, the Department was of the view that the Appellant had not paid 50% of the tax dues declared on or before 30.12.2013 as was the requirement in terms of Section 107(3) of the Act read with Circular No.170/5/2013-ST dated 08.08.2013. The appellant was issued a show cause notice proposing rejection of the declaration filed by the appellant. After due process of law, the Ld. Designated Authority, vide Order No.29/2014 (VCES) ibid rejected the declaration finding that the appellant had been issued show cause notices covering the previous period on the same issue which had been adjudicated, making the declaration liable for rejection under second proviso to Section 106(1) of the Finance Act, 2013. The Ld. Designated Authority, inter-alia, found that the appellant was issued a show cause notice No.201/2010 dated 15.04.2010 towards demand of service tax on service charges realised by the appellant during the period Jan 2009 to June 2009 which was adjudicated vide the Order in Original No.17/2012 dated 28.03.2012. Therefore, the Ld. Designated Authority he....
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....ences under the Act or rules and [iv] an audit has been initiated and such inquiry, investigation or audit is pending as on 01.03.2013, then the designated authority shall, by an order recording the reasons in writing, reject such declaration. It was argued that the rejection of the declaration made by a tax payer voluntarily in terms of Sec. 106 [1] of the Finance Act, 2013 was not contemplated therein. As regards the provisions contained in Sec. 107 [3] of the Finance Act even though the said provision mandate for payment of the 50% of the declared tax on or before 31.12.2013, sub section [4] permitted the part of the declared tax remaining to be paid, shall be paid on or before 30.06.2014 and further, the proviso appended thereto permitted the payment of the said amount till December 2014, along with interest as per the sections specified therein, to be computed for the period of delay starting from 01.07.2014. Further, it is argued, Sec. 111 ibid empowered only the commissioner, upon arriving at reasonable belief that the declaration made was substantially false, for reasons to be recorded in writing, serve a notice on the declarant to show cause as to why ....
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....ring for the Respondent, reiterated the findings of the Appellate Authority. Ld. Authorised representative contended that the scheme was to encourage voluntary compliance of stop filers and non-filers and service providers who have not disclosed their true liability in their service tax returns filed by them during the period from October 2007 to December 2012 to pay the tax dues as per the specified time frame. Ld. A.R. argued that once the appellant had failed to pay the 50% of tax dues on or before 31.12.2013, the benefit of the scheme is not available to the appellant. It was argued that the Appeal be rejected as it is without merits. 6. We have heard both sides, perused the appeal records as well as the Scheme, Circular and case laws submitted. 7. The pivotal issue that arises for our consideration is whether the rejection of the declaration filed by the appellant under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 is tenable. 8. We find that the Learned Appellate Authority vide the impugned order has upheld the order of the Learned Designated Authority rejecting the declaration for noncompliance of the provisions of the VCES Scheme 2013 after render....
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....cess leviable thereon under any other Act for the time being in force, but not paid as on the 1st day of March, 2013. (2) Words and expressions used herein and not defined but defined in the Chapter or the rules made thereunder shall have the meanings respectively assigned to them in the Chapter or the rules made thereunder. Person who may make declaration of tax dues. 106. (1) Any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the Chapter has been issued or made before the 1st day of March, 2013: Provided that any person who has furnished return under section 70 of the Chapter and disclosed his true liability, but has not paid the disclosed amount of service tax or any part thereof, shall not be eligible to make declaration for the period covered by the said return: Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period. (2) Where a declaration has been made by a person ag....
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....ent made from time to time under this Scheme along with a copy of acknowledgement issued to him under sub-section (2). (7) On furnishing the details of full payment of declared tax dues and the interest, if any, payable under the proviso to sub-section (4), the designated authority shall issue an acknowledgement of discharge of such dues to the declarant in such form and in such manner as may be prescribed. Xxxx No refund of amount paid under the Scheme. 109. Any amount paid in pursuance of a declaration made under sub-section (1) of section 107 shall not be refundable under any circumstances. Tax dues declared but not paid. 110. Where the declarant fails to pay the tax dues, either fully or in part, as declared by him, such dues along with interest thereon shall be recovered under the provisions of section 87 of the Chapter. Failure to make true declaration. 111. (1) Where the Commissioner of Central Excise has reasons to believe that the declaration made by a declarant under this Scheme was substantially false, he may, for reasons to be recorded in writing, serve notice on the declarant in respect of such dec....
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.... 72,73 or 75 of Chapter V of the Finance Act, 1994 has been issued or made before 1st March, 2013. The first proviso to sub-section(1) makes a person who has furnished return under Section 70 and disclosed his true liability, but not paid the disclosed amount of service tax or part thereof, ineligible to make a declaration for the period covered by the said return. The second proviso to sub-section (1) further provides that where a notice or order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period. 14. In other words, the first proviso which makes a person who has furnished his return disclosing his true liability but has not paid the disclosed amount or part thereof ineligible and the second proviso which bars a person from making a declaration of his tax dues on an issue for the subsequent period, in case on the very same issue any notice or order of determination has been made, makes it amply clear that the intent of the Government was to exclude such of those persons who have already come to the notice of the Department as defaulters. Thus, sub-section (1....
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....mitations or restrictions, it is reasonable to hold that it carries with it the power of doing all such acts or employing such means as are reasonably necessary for such execution. If in the exercise of the power or the performance of the official duty, improper or unlawful obstruction or resistance is encountered, there must be the right to use reasonable means to remove the obstruction or overcome the resistance. This accords with common sense and does not seem contrary to any principle of law. The true position is neatly stated thus in Broom's Legal Maxims, 10th Ed., at page 312 : "It is a rule that when the law commands a thing to be done, it authorises the performance of whatever may be necessary for executing its command." (emphasis supplied)." 16. Hence, we are of the firm opinion that the fact that VCES enumerates certain situations in which the authority is required to act in a particular manner for the stated reasons, no doubt, would require the authority to act only in the manner specified in such situations, and not in any other manner in so far as such situations are concerned. But, in the absence of any express inhibition of the powers of the Designated Auth....
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....ame on or before the 31st day of December, 2014 along with interest thereon, at such rate as is fixed, for the period of delay starting from 1st day of July, 2014. 19. Thus, there are specified time frames in the sub-sections of the said section 107 that mandate the extent of payments to be made by the stipulated dates. The first mandated time limit is the 31st of December 2013, as prescribed in sub-section (3) of Section 107, on or before which date the declarant has to not only necessarily pay not less than fifty percent of the declared tax dues, but also must submit proof of such payment to the designated authority. Subsequent to such payment of the minimum fifty percent of the declared tax dues, sub-section (4) of Section 107 then provides that the tax dues or part thereof remaining to be paid after the payment made under sub-section (3) shall be paid by the declarant on or before the 30th day of June, 2014. Thus, it is only the balance of the tax dues or part thereof that is pending payment, post the payment of fifty percent of the declared tax dues, that has to be paid on or before 30th June 2014. However, in case the declarant is unable to make good the pending payment du....
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....ayments have to be made have been clearly stated in Section 107. The Scheme does not provide either the Revenue or the Declarant to amend or alter the time lines specified therein or the respective quantum of payment to be made, at their discretion. Therefore, these provisions have to be strictly interpreted, and the time limit specified in the Scheme have to be strictly adhered to by the declarant. For this Tribunal to hold that, even if the mandated fifty percent of the tax dues has not been deposited before 31.12.2013, the appellant can make these payments belatedly, as has been canvassed by the Ld. Counsel, would tantamount to this Tribunal sanctioning variations in the Scheme, which this Tribunal undoubtedly is not empowered to do. In any event, it is beyond cavil that the appellant has not deposited the fifty percent of the tax dues by the date of 31.12.2013 as mandated in Section 107 (3), and has only paid five lakhs of the declared tax dues of Rs.39,63,652/- and that too only on 24.01.2014. The plea of the Appellant is that it was prevented from adhering to the time line specified due to severe financial hardship, which incidentally, remains a mere averment sans any evidenc....
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....e learned counsel for the petitioner, that it encompasses both the cases of delay in depositing the taxes at the first stage of sub-section (3) of Section 107 and second stage of sub-section (4) of section 107, the proviso to sub-section (4) would be rendered wholly redundant. If as suggested, shortfall in the taxes could be accepted after charging interest under Section 110, there was no need to make special proviso for extending time for depositing the remaining of the taxes under sub-section (4) of Section 107. Further, Section 110 pertains to compulsory recovery of taxes with interest. Sub-sections (3) and (4) of Section 107 refer to voluntary tax deposit by a declarant in terms of the scheme. Both these operate in separate fields. 8. In the result, the petition is dismissed." (emphasis supplied) 23. The Hon'ble High Court of Calcutta in CST v. Parjiat Vyapar Pvt. Ltd, 2016 (41) STR 809 (Cal), has also held to the same effect, namely, that 50% of the declared tax dues have to be paid by 31st December,2013, to be entitled to the benefit of the VCES. The said decision is seen maintained as reported in Parijat Vyapar Pvt. Ltd. v. Commissioner - 2018 (16) G.S.T....
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....n or before 30th June, 2014, if any declarant has got any difficulty he can make the payment on or before 31st December, 2014, but, in this eventuality the payment shall be made with interest. This is the another liberal approach of the Union of India as provided under the VCES, 2013. (d) The scheme is nothing but a policy decision of Union of India and this court will be extremely slow and careful in making further liberal interpretation of the VCES, 2013, because this court is not sitting in appeal against the said scheme nor this court can replace an existing scheme with a better one. The clauses of VCES, 2013 cannot be changed by this court. If Section 107(3) directs the declarant to make the payment of at least 50% of the service tax so declared under sub-section (1) of Section 107, to be paid on or before December, 2013, court cannot give further instalment in the first instalment to the effect that part of the payment can be made on or before 31st December, 2013 and the remaining amount can be paid later on. This is not permissible while exercising powers under Article 226 of the Constitution of India. (III) It appears on perusal of VCES, 2013 that....
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....f second instalment, viz. if the second instalment is not paid before 30th June, 2014, the declarant can make the payment on or before 31st December, 2014, but, with interest. Thus, this petitioner-declarant has committed a breach of Section 107(3) of the VCES, 2013 in making the payment of first instalment and hence, he is not entitled to get the benefits provided under this scheme. (VII) As submitted by the counsel for the petitioner, some errors might have been committed by the department in case of one or two declarant, but no benefit of those errors can be extended to the present petitioner because there is no equality in illegality committed by this respondent. 4. As a cumulative effect of the aforesaid facts and reasons, there is no substance in this writ petition, as no error has been committed by the Assistant Commissioner, Central Excise and Service Tax, Division-IV, Jamshedpur, while passing the order dated 7th April, 2014, hence, this writ petition is hereby dismissed." (emphasis supplied) The said decision is seen maintained as reported in Manpreet Engineering and Construction Co. v. Union of India - 2017 (47) S.T.R. J160 (S.C.). 24. Mo....
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....ibe to the Ld. Counsel's contention, namely, that the provisions mandating not to refund the tax paid under the scheme with power to recover the balance tax with interest by invoking Section 87 of the Finance Act clearly shows that the scheme was designed in such a way to accept all declarations except those which are couched by substantially false declaration or where section 106 (2) of Finance Act, 2013 is involved and not otherwise. At this juncture it is also apposite to note what has been held by the Hon'ble High Court of Gujarat in the decision in Ramilaben Bharatibhai Patel v. Union of India, 2014 (35) STR 695 (Guj), as reproduced above, namely, "If as suggested, shortfall in the taxes could be accepted after charging interest under Section 110, there was no need to make special proviso for extending time for depositing the remaining of the taxes under sub-section (4) of Section 107. Further, Section 110 pertains to compulsory recovery of taxes with interest". 26. We also note that even in the Circular No.170/5/2013-ST dated 8th August, 2013 produced by the Ld. Counsel for the appellant, which circular has been issued on the subject of clarifications with respect to the S....
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....e Authority has not committed any error in upholding such rejection. We find that the decision submitted by the Ld. Counsel for the Appellant in the case of Assistant Commissioner v Frankfinn Aviation Services Pvt Ltd, 2020(41) GSTL J 51 (SC), whereby the Apex Court dismissed the SLP preferred against the Delhi High Court Judgement as reported in 2014 (34) STR 165 (Del) is distinguishable as the outcome was premised on facts different from the facts of the instant case. The Delhi High Court has noticed the facts of the case in para 2 and the relevant portions are as under: "2.........The petitioner relies upon Section 106 and 107 of the Scheme and submits that it furnished the requisite declaration so as to enable the authorities to accept it and grant the benefit. It is also contended that the petitioner deposited 50% of the amount due before the time stipulated, i.e., 31-12-2013. The petitioner is aggrieved by the order of the Assistant Commissioner/designated authority VCES dated 5-3-2013 whereby its declaration or application seeking onetime benefit was rejected. The order is premised upon the existence of the dispute concerning the previous period between 10-9-2004 - ....