VCES 2013: Even 6 days delay cannot be condoned

Brief of the case:

• The Hon’ble Kerala High Court in the above cited case held that Voluntary Compliance Encouragement Scheme (VCES) was in the nature of an Amnesty Scheme and, therefore, its provisions have to be strictly interpreted. Infact, the scheme was a settlement between the assessee and the department and from the terms of the settlement neither party can be permitted to retract.
• Therefore, even the marginal delay of 6 days in depositing the balance 50% of the tax declared due under the scheme cannot be condoned.
  

Facts of the case:

• The petitioner deposited 50% of tax liability declared in Voluntary Compliance Encouragement Scheme (VCES), 2013 amounting to Rs. 4,34,413/- on 30.12.2013 and the balance amount of 50% together with interest thereon was paid by him only on 06.01.2015.
• Department informed the petitioner that on account of delayed payment of the amount under the Voluntary Compliance Encouragement Scheme, 2013, the petitioner would be denied the benefit of the said Scheme, and recovery of service tax dues for the period April 2008 to March 2015 would be effected against the petitioner. The period of delay was only 6 days i.e. the balance 50% liability required to be paid under the scheme was paid on 06.01.2015 against the due date 31.12.2014 prescribed in the scheme.
• Aggrieved assessee filed writ petition before Kerala High Court.
  

Contention of the Petitioner:

• It was submitted that the first instalment was paid within the prescribed time and second instalment was paid with a marginal delay of 6 days along with interest. Therefore, he should not be denied the substantive benefit that was offered to assessees under the VCES Scheme, 2013.
• It was also submitted that in the context of interpretation of exemption provisions the strict interpretation would apply only to ascertain whether the petitioner is entitled to the benefit of the exemption and once the petitioner is found entitled to the benefit of the exemption, then the exemption notification has to be interpreted widely so as to try and retain the petitioner within the benefit of the exemption that was contemplated under the notification.
  

Contention of the Revenue:

• The learned counsel for the department contended that the VCES Scheme, 2013, is in the nature of an Amnesty Scheme and it is not similar to an exemption notification granted under a taxing statute.
• The amnesty was settlement with the agreed upon conditions wherein the terms and conditions to be complied with strictly and no party to settlement can retract even slightly from them.
  

Held by Hon’ble High Court:

• High court observed that it is not in dispute that the petitioner had complied with the requirements of the Scheme with regard to the payment of the first instalment (50% of tax due declared in the scheme) as due to be paid on 31.12.2013 and paid on 31.12.2013.
• As regards the second instalment comprising of the balance 50%, the petitioner had chosen to pay the amount beyond June 2014 (i.e. in extended period available upto 31.12.2014), and therefore, became liable to pay the differential amount together with interest, on or before 31.12.2014.
• But the petitioner could pay his 2^nd instalment only on 06.01.2015 after a delay of 6 days from the last date prescribed in the amnesty scheme. Now, the issue to be considered in this writ petition is whether, for the mere delay of six days in effecting payment of the balance 50% under the VCES Scheme, 2013, the petitioner could be denied the benefit of the Scheme in totality.
• The VCES, 2013, was in the nature of an Amnesty Scheme and, therefore, its provisions have to be strictly interpreted, and the time limit specified in the Scheme for the payment of amounts together with interest have to be strictly adhered to. Infact, the scheme was a settlement between the assessee and the department and from the terms of the settlement neither party can be permitted to retract. To allow the petitioner to effect payments belatedly would amount to altering the terms of the settlement and that cannot be done by the court in exercise of its powers under Article 226 of the Constitution of India.
• In the instant case , although the delay occasioned by the petitioner was only of six days from the cut-off date 31.12.2014(with interest)  mentioned under the Scheme but the petitioner did not effect payment of the amounts even before the extended date of 31.12.2014.Therefore, no relaxation can be given to assessee.