Taxes paid on or after Match 1, 2013 would be eligible for VCES even if paid before May 10, 2013 – Circular dated August 8, 2013, taking contrary view was held invalid
Sadguru Construction Co. (the Petitioner)is a partnership firm engaged in the business of construction. On March 8, 2013, preventive officers of the Service Tax Department conducted inquiry at the premises of the Petitioner regarding unpaid Service tax dues. Various post-dated cheques were taken from the Appellant (under duress). Against such post-dated cheques, during the period between March 9, 2013 to April 15, 2013, the Petitioner deposited total sum of Rs. 35.51 lakhs with the Department.
On August 24, 2013, the Petitioner filed a declaration under Voluntary Compliance Encouragement Service (VCES or the Scheme) declaring tax dues of Rs. 44 lakhs. Thereafter, the Petitioner filed a revised declaration on December 30, 2013 with revised tax dues of Rs. 46 lakhs. This amount included the sum of Rs. 35.51 lakhs deposited between March 9, 2013 to April 15, 2013. The Department, relying upon following extract of Circular No. 170/5/2013-ST, dated August 8, 2013 (“the Circular”),sought to reject VCES declaration to the extent of Rs. 35.51 lakhs(“Impugned amount”) arguing that these amounts were deposited before May 10, 2013 when the Scheme was promulgated and therefore, declaration of amount could not be a declaration under the Scheme:
“…..If any “tax dues” have been paid prior to the enactment of the scheme, any liability of interest or penalty thereon shall be adjudicated as per the provisions of Chapter V of the Finance Act, 1994 and paid accordingly….”
Thereafter, the Designated Authority acknowledged the declaration of the Petitioner only to the extent of tax dues to the tune of Rs. 10.50 lakhs and rejected the Impugned amount. Being aggrieved, the Petitioner filed a petition before the Hon’ble High Court of Gujarat.
The Hon’ble High Court of Gujarat, after analyzing provisions of Section 105 and Section 106 of the Finance Act, 2013, held as under:
Hence, the Designated Authority was directed to issue a fresh acknowledgement or amend the acknowledgement forwarded to the Petitioner so as to include the said additional sum of Rs.31.51 lakhs as tax dues declared.