Archna Traders Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Introduction: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Ahmedabad rendered a significant decision in the case of Archna Traders vs. C.C.E. & S.T. The appeal centered on the denial of the benefit of the Voluntary Compliance Encouragement Scheme (VCES) under Section 106 of the Finance Act, 2013.
Detailed Analysis:
1. VCES Scheme Denial Under Section 106:
- Archna Traders filed an appeal against the denial of VCES Scheme benefits.
- Section 106 of the Finance Act, 2013, specifies eligibility criteria for declaring tax dues. Subsection 2 outlines that persons under inquiry or investigation are ineligible for the scheme.
- The appellant argued that the inquiry was against M/s. Adani, not them. Still, the summon issued on 28.03.2012 and 07.03.2013 raised concerns.
2. Section 106(2) Interpretation:
- Section 106(2) specifies that if an inquiry or investigation is initiated by summons, the person becomes ineligible for VCES.
- The summon issued to Archna Traders on 28.03.2012 fell within the period before the cut-off date of 01 March 2013.
- The subsequent issuance of a demand show cause notice (SCN) to the appellant further supported their ineligibility for the scheme.
3. CESTAT Ahmedabad’s Decision:
- CESTAT Ahmedabad, considering the summon and subsequent SCN, upheld the denial of VCES Scheme benefits.
- The order emphasized that Section 106(2) clearly stipulates ineligibility for those under summons-initiated inquiry, aligning with the appellant’s situation.
Conclusion: In a detailed analysis, CESTAT Ahmedabad dismissed Archna Traders’ appeal, upholding the denial of VCES Scheme benefits. The decision aligned with Section 106(2) of the Finance Act, 2013, which deems persons under summons-initiated inquiry ineligible for the scheme. This ruling sets a precedent for cases involving VCES Scheme benefits and provides clarity on the interpretation of Section 106. Parties are advised to consider this decision in similar contexts, acting in accordance with the dictated and pronounced order of the tribunal.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal has been filed by M/s. Archna Traders against denial of benefit of VCES Scheme to the appellant.
2. Learned Counsel for the appellant pointed out that they had applied for VCES Scheme, however the benefit of VCES Scheme was denied to him invoking Section 106 of the Finance Act, 2013. The said Section reads as follows:
“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 against whom,-
(a) an inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of –
(i) search of premises under section 82 of the Chapter; or
(ii) issuance of summons under section 14 of the Central Excise Act, 1944 (1 of 1944), as made applicable to the Chapter under section 83 thereof; or
(iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or
(b) an audit has been initiated,
and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration.”
2.1 He argued that in the instant case inquiry was initiated against M/s. Adani and summon was issued to the appellant on 28.03.2012 and 07.03.2013. Learned Counsel argued that there was no inquiry against the appellant and the inquiry was only against M/s. Adani and therefore invocation of Section 106 to deny the benefit of VCES Scheme is incorrect.
3. Learned AR relied on the impugned order.
4. have considered the rival submissions. I find that Section 106 elaborates the nature of person who is eligible to make a declaration under VCES Scheme. Sub-section 2 of 106, prescribes that people against whom any inquiry or investigation have been initiated prior to 1 March 2013 are not eligible for making VCES declaration. In the instant case, we find that a summon was issued to the appellant on 28 March, 2012 and subsequently again on 07.03.2013. Clause 2 of Section 106 reads as follows:
“106(2) Where a declaration has been made by a person against whom,-
(a) an inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of –
(i) search of premises under section 82 of the Chapter; or
(ii) issuance of summons under section 14 of the Central Excise Act, 1944 (1 of 1944), as made applicable to the Chapter under section 83 thereof; or
(iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or
(b) an audit has been initiated,
and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration.”
4.1 It is seen that Clause (ii) & (iii) of sub-Section 106 (2) prescribes that, where summon has been issued 14 of Central Excise Act 1944, the person becomes in eligible for the scheme. In the instant case, it is noticed that a summon was issued to the appellant on 28.03.2012 much prior to the cut off date of 01 March 2013. Moreover, it is also informed to the court by the Learned Counsel that the subsequently a demand SCN was issued to the appellant in the same proceedings which were initiated by said summons. In view of above the appellants were rightly held ineligible for the scheme.
5. In this background, I do not find any error in the impugned order. The appeal is therefore dismissed.
(Dictated & Pronounced in the open Court)
