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2018 (10) TMI 327 - HC - Service TaxRejection of VCES Declaration - pending issue under in any forum of litigation - rejection on the ground that if the issue with regard to ‘any period’ ‘on any issue’ is pending in litigation at any Forum from the side of the assessee, no Declaration can be made by the assessee under VCES, 2013 and the same cannot be accepted by the Respondent-Authority and therefore, the present rejection of the Declaration by the concerned authority was justified - applicability of provisions of Section 73 of Chapter V of the Finance Act, 1994 as inserted by Finance Act, 2006 w.e.f. 18.04.2006 for the impugned period. Held that:- This Court is satisfied that the Second Proviso to Section 106 of the VCES-2013 does not make any distinction about the payment of service tax by the assessee under the VCES as to Section 73 or Section 73A of the Act. There is no watertight compartment between the payment of due service tax by the assessee under the said VCES whether it is under Section 73 of the Act or 73A of the Act. Section 73 of the Act envisages recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded to the assessee whereas Section 73A of the Act which was later on inserted by Finance Act, 2006 envisages the service tax wrongly collected by any person to be deposited with Central Government. Section 73A of the Act was obviously to prevent any situation of unjust enrichment to the assessee by retaining the amount even wrongly collected from the customers in the name of service tax and therefore that amount so collected as service tax in any case was liable to be deposited with the Central Government. The short payment of service tax under Section 73 of the Act whether or not levied earlier or short levied earlier does not stand on a different footing so far as VCES, 2013 is concerned. The Second Proviso clearly begins with a negative stipulation 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”. Therefore, the Second Proviso to Section 106 of the Act is a clear bar in the present case for the assessee. The appeal filed by Assessee admittedly pending before the CESTAT regarding its liability to pay service tax on the service provided by it for the previous period. Merely because the period in the appeal before the Tribunal and the period covered in the Declaration are different, the Second Proviso cannot be rendered otiose or inapplicable to the case. The VCES and the determination of issues by competent adjudication Forums cannot be separated in any water-tight compartments and segregated in silos, so to say. The combined purpose of Sections 73 and 73A of the Act is obvious and clear and that is not to allow the Assessee to retain any component of service tax in any manner whether already assessed but not paid, deposited short levied or short paid or erroneously refunded or even wrongly collected but not so far deposited and paid to the Central Government. The loophole left in Section 73 of the Act was sought to be plugged by the Legislature by bringing on the statute book Section 73A of the Act and therefore, both these provisions cannot be read in isolation for the purpose of VCES. The assessee’s Declaration was rightly rejected by the Respondent-authority - petition dismissed.
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