JMD Limited Vs Commissioner (CESTAT Delhi)
CESTAT Delhi held that denial of benefit of Voluntary Compliance Encouragement Scheme, 2013 (VCES) based on the show cause notice which is time barred is unjustified.
Facts- The appellants were registered with the service tax department. The appellant filed the VCES on 27.12.2013 declaring their tax dues as Rs. 1,17,98,160/-. The 50% of the declared tax was deposited by the appellant before 31.12.2013 and the remaining was deposited within the prescribed period.
The Designated Authority issued the show cause notice dated 24.01.2014 to the effect that an enquiry against the company was initiated by Anti Evasion Branch of the Commissionerate and the same is pending as on 01.03.2013 and therefore it appears that u/s. 106 of the Finance Act, 2013 they are not eligible to file the declaration under VCES.
Conclusion- Held that the show cause notice in the present case is time barred and cannot be acted upon. Further, the Circular dated 25.11.2013 in unequivocal words has stated that, Commissioner should ensure that the said time limit of giving the notice within 30 days has to be followed scrupulously.
The very purpose of introducing the scheme is to motivate the registered assessee who had stopped filing the returns to file returns and pay the taxes. The underlying object is to reduce unnecessary litigation, which is evident from the clarifications made in the Circulars. The VCES Scheme as further clarified in the Circulars needs to be implemented so as to give full play which would not only benefit the assessee but also the revenue.
FULL TEXT OF THE CESTAT DELHI ORDER
1. The present appeal has been filed against the Order-in-appeal No. 87/ST/DLH/2017 dated 12.12.2017 passed by the Commissioner (Appeals-I) whereby the rejection of the declaration filed by the appellant under Voluntary Compliance Encouragement Scheme, 2013 (VCES) was affirmed.
2. Briefly stated, the appellants were registered with the Service Tax department vide Registration No. AABCJ0244KST001 for the following taxable services:
(a) Renting of Immovable Property Service
(b) Security Agency Service
(c) Construction of Residential Complex Service
(d) Commercial or Industrial Construction Services
(e) Business Auxiliary Services
(f) Special service provided by Builders
(g) Legal Consultancy Services
The appellant filed the VCES declaration on 27.12.2013 declaring their tax dues as Rs. 1,17,98,160/- for the period 01.04.2012 to 31.12.2012, on account of Rental Services, PLC and Transfer Charges, Residential Construction Services, Commercial Construction Services and Services under reverse charge. The 50% of the declared tax was deposited by the appellant before 31.12.2013 and the remaining was deposited within the prescribed period.
3. The Designated Authority issued the show cause notice dated 24.01.2014 to the effect that an enquiry against the company was initiated by Anti Evasion Branch of the Commissionerate and the same is pending as on 01.03.2013 and therefore it appears that under Section 106 of the Finance Act, 2013 they are not eligible to file the declaration under VCES. The Designated Authority vide order dated 20.01.2016 rejected the declaration, inter-alia observing as under:-
“However, it is seen that as part of the investigation, the Department had asked for documents and moreover a visit under Rule 5A of Service Tax Rules was made by the Department on 18.02.2013 in this regard. Thus, it is seen that as on 01.03.2013 there was an enquiry pending against M/s JMD Limited which was not of the roving nature.”
4. The appeal filed by the appellant was also rejected by the impugned order and hence the present appeal has been filed before this Tribunal.
5. We have heard Sh. A. K. Batra, ld. Counsel for the appellant and Sh. Rohit Issar, ld. Authorised Representative for the Revenue and perused the case records.
6. The issue that arises for our consideration are:-
(i) Whether the enquiry or investigation in terms of Section 106(2) of the Finance Act, 2013 on the basis of which the declaration for VCES has been rejected is of a roving nature?
(ii) Whether the show cause notice in question is time barred, having been received by the appellant beyond the specified period of thirty days?
7. Learned Counsel for the appellant has taken us through various Circulars which have been issued from time to time clarifying the issues that has arisen in the course of implementing the VCES Scheme and as also referred to some of the decisions of the Tribunal and also of the Bombay High Court. The main contention of the appellant was that the letter dated 18.02.2013 whereby he has been asked to supply the documents/ information is only of general nature and does not refer to any specific subject with which the enquiry can be said to have been initiated. On the other aspect of the show cause notice being time barred, he submitted that the show cause notice was dated 24.01.2014 but the same was received by him as per the postal record on 03.02.2014, which is beyond the period of thirty days.
8. Learned Authorised Representative for the Revenue has relied on the findings of the impugned order as well as the Order-in-original passed by the Adjudicating Authority and according to him when the appellant was asked to supply the documents / data/ information, it was clearly initiation of an investigation, which was admittedly before 01.03.2014 and therefore the case squarely falls under Section 106 (2) of the Act and the appellant is not entitled to the benefit of VCES. On the point of issue of show cause notice being time barred, the submission of the learned AR is that the same was issued within the period of thirty days i.e. on 24.01.2014 of the declaration made by the appellant on 27.12.2013.
9. The Service Tax VCES came into effect on enactment of the Finance Bill, 2013 on 10.05.2013. Section 106 of the Act provided for the making of a declaration of tax dues in respect of which no notice or order of determination under Section 72, 73 or 73A has been issued before 01.03.2013. Clause (2) of Section 106 provides for rejection of such a declaration in the eventualities specified therein and sub-clause (a) thereof provides where an enquiry or investigation in respect of service tax not levied or not paid or short levied or short paid has been initiated and which is pending as on 01.03.2013. In view of certain references seeking clarification as regards the scope and applicability of the Scheme, Circular No. 169/4/2013-ST dated 13.05.2013 was issued. The relevant para of the said Circular concerning the issues at hand is given below:-
