2016 (4) TMI 374 - HC - Service Tax

Date for deposit of Service tax by cheque - period between April and December 2012 - VCES Scheme 2013 - Manpower services - Assessee deposited service tax by cheque on 31.12.2013 but the bank realised the same on 8.1.2014 - Held that - if the cheque is deposited by cheque then the date of presentation of cheque to the bank designated by the Central Board of Excise and Customs for this purpose shall be deemed to be the date on which service tax has been paid subject to realization of that cheque. It is not in dispute that the assessee deposited the cheque constituting 50% of the service tax dues in terms of the VCES Scheme 2013 on 31.12.2013 and it was realised on 8.1.2014. With the cheque having been realized the date on which the service tax should be taken to have been paid is deemed to be the date of presentation of the said cheque in terms of Rule 6(2A) of the ST Rules. - Decided in favour of assessee

Summary

Issues:
Interpretation of the date of payment under the Voluntary Compliance Encouragement Scheme, 2013.

Analysis:
The petitioner, engaged in providing manpower services, faced financial difficulties leading to non-payment of service tax between April and December 2012. The Government introduced the VCES Scheme to allow defaulters to clear dues with immunity from penalties by paying 50% by December 31, 2013, and the balance by June 30, 2014.

The key contention revolved around the date of payment - whether it should be considered when the cheque was deposited or when it was encashed. The petitioner deposited 50% of the declared tax dues on December 31, 2013, but it was realized on January 8, 2014. The Department rejected the VCES declaration citing non-payment by the deadline, leading to a legal challenge.

The court examined Rule 6(2A) of the ST Rules, which states that the date of presentation of the cheque to the designated bank should be deemed as the date of payment subject to realization. As the cheque was realized, the court held that the payment date should be considered as December 31, 2013. The court found the Department's rejection unjust as it failed to consider this rule.

The court set aside the impugned order dated August 15, 2014, as it did not reference Rule 6(2A) of the ST Rules. The rejection of the petitioner's VCES plea was deemed legally flawed. The court directed the Department to issue a declaration in favor of the petitioner under the VCES 2013 within two weeks, concluding the writ petition in the petitioner's favor.