TMI Blog2014 (12) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... anner where certain information/documents have been requisitioned from the declarant without specifically quoting the statutory authorities, such as Section 14 of the Central Excise Act, as made applicable to Service Tax vide Section 83 of the Finance Act, Section 72 of Finance Act, Rule 5A of the Service Tax Rules 1994. In view the objectives of the VCES, which is to encourage disclosure of tax dues and compliance of service tax law by the persons who have not paid service tax dues for the period from Oct. 2007 to Dec. 2012, either on account of ignorance of law or otherwise. I further observe that VCES is the opportunity for such person to pay the tax dues and come clean. Rejection of the declaration merely on the basis of roving enquiries as in the instant case would defeat the purpose of the VCES, hence the impugned order needs to be set-aside to restore the right of the declarant to come clean by paying the tax dues. Further, after going through the VCES, I find that only the officers notified as designated authority are authorised for the purposes of this scheme. In the case of declarant the Deputy Commissioner, Central Excise Division, Sadashiv Complex, Ambala-Chandiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, the designated authority found that the jurisdictional Range office has asked the declarant to produce documentary evidence in respect of payment of their service tax liability vide letters dated 12-2-2013 and 27-2-2013 but no response was received from the declarant whose premises was visited by the preventive staff of the Commissionerate on 4-3-2013, which has initiated investigation against them and is pending. Therefore, Show Cause Notice dated 18-9-2013 was issued to the declarant to explain as to why their declaration dated 17-7-2013 be not rejected on the grounds mentioned supra and subsequently vide the impugned order, the designated authority rejected the declaration of the declarant, filed under the VCES. 2.1 Since, as per the clarification contained against serial No. 13 of Board s Circular No. 170/5/2013-S.T., dated 8-8-2013, the VCES does not have a statutory provision for filing of appeal against the order for rejection of declaration under Section 106(2) of the Act by the designated authority, therefore, against rejection of their declaration dated 17-7-2013, the declarant filed Civil Writ Petition No. 26929 of 2013 before the Hon ble High Court of Punj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically excluded, apply to proceedings under the scheme. The impugned order passed by the Deputy Commissioner of Central Excise and Service Tax would necessarily be appealable under Section 86 of the Indian Finance Act, 1994. Faced with this situation, counsel for the petitioner prays that the writ petition may be dismissed as withdrawn with liberty to file an appeal. It is further prayed that the appeal may be directed to be decided within fortnight. In view of the statement made by counsel for the petitioner, the writ petition is dismissed as withdrawn with liberty to file an appeal. In case, such an appeal is filed, it shall be considered and decided within a fortnight. The petitioner shall be free to raise all available pleas, in accordance with law. 3.1 I find that though Board s Circular dated 8-8-2013, has specifically clarified vide Sr. No. 13 that there are no statutory provisions for filing of appeal against the order for rejection of declaration under section 106(2) of the Act, yet the Hon ble High Court has after taking a note of it, held it to be not acceptable. The Hon ble High Court while holding that the impugned order is appealable under section 86 of the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etters dated 12-2-2013 and 27-2-2013 does not mention any of these sections or rules, therefore , the provisions of sub- section (2)(a)(iii) of section 106 are not applicable, as letters requiring production of documents not mentioning Sections 14(CEA), 72(FA) and Rule 5A(STR), would not be treated as covered under Section 106(2) of the Act. Reliance placed on TRU Circular dated 13-5-2013. (iv) That the designated authority has erred in ignoring the clarification given at point No. 1 of the Circular No. 170/5/2013-S.T., dated 8-8-2013, as per which communication of the nature simply asking for information of roving nature regarding business activities without seeking any documents would not attract the provisions of Section 106(2)(a) of the Act. (v) That the designated authority cannot reject a declaration where no inquiry or investigation was pending as on 1-3-2013. The letter dated 27-2-2013 shows the dispatch to be on 5-3-2013 and the HQ Preventive has visited the premises of the declarant on 4-3-2013. (vi) That the File No. of both the letters dated 12-2-2013 and 27-2-2013, itself shows these to be miscellaneous letters. (vii) That they have requested for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the letter written by the superintendent no statutory provisions as clarified by the Board vide their Circular dated 13-5-2013 and 8-8-2013 has been mentioned, does not hold ground as it has been held by the Hon ble High Court in the case of Vardhman India Products reported at 2009 (236) E.L.T. 637 (P H) that non mentioning of Section/Rule does not vitiate the proceedings. (ii) That the declarant s contention that the letter dated 27-2-2013 was dispatched on 5-3-2013 (after 1-3-2013) also does not hold ground as this letter was a reminder to the earlier letter dated 12-2-2013. The enquiry/investigation stood already initiated against the declarant before 1-3-2013 by way of issue of letter dated 12-2-2013 vide which information regarding details of amount booked towards construction linked payment from 1-7-2010 onwards and for non-filing of S.T.-3 returns, were called from the declarant. (iii) That there are no provisions for filing appeal against the order of rejection passed by the designated authority under the VCES as has been clarified by the Board at Point No. 13 of Circular No. 170/5/2013-S.T., dated 8-8-2013. 6. On receipt of the appeal papers of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdictional Superintendent do not constitute initiation of enquiry or investigation against them within the meaning of Section 106(2)(a)(iii) of the Act is also without merit. Reference is invited to Section 106(2)(a)(iii) of the Act which states that the declaration filed under VCES is liable to be rejected if any enquiry or investigation for short payment or non-payment of service tax has been initiated by way of requiring production of accounts/documents or other evidence under the Finance Act or the Rules made thereunder and the same is pending as on 1-3-2013. Further as per Section 72 of the Finance Act, the Central Excise Officer may require any person to produce such accounts, documents or other evidence as he may deem necessary. The letters dated 12-2-2013 and 27-2-2013 addressed to the declarant by the jurisdictional Range Officer were regarding Non-filing of S.T.-3 returns which is mandatory under Section 70 of the Finance Act read with Rule 7 of Service Tax Rules, 1994. Further, in the said letter, the declarant was also requested to provide details of amounts booked towards construction linked payments from 1-7-2010 onwards alongwith documentary evidence, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the declarant was just an acknowledgement. (v) As regards declarant s contention that the declaration filed under VCES be allowed to be corrected for arithmetical correction of the rate of tax to enable the appellant to deposit 50% of ₹ 10,39,10,420/- before 31-12-2013 and the remaining 50% on or before 3-6-2014 as the tax has been inadvertently/clerical error been calculated @ 12% instead of 10% as applicable during the period 2011-12, reference is invited to point no. 10 of Circular No. 170/5/2013-S.T., dated 8-8-2013, wherein, it is mentioned that in case, the mistake is discovered suo motu by the declarant himself, he may approach the designated authority, who, after taking into account the overall facts of the case may allow amendments to be made in the declaration provided that the amended declaration is furnished by declarant before the cut off date for filing of declaration i.e. 31-12-2013 and the declarant has not yet submitted the amended declaration. (vi) The contention of the declarant that the adjudicating authority as a quasi judicial officer has no power to review its own orders is without any merit as no such order has been reviewed by the und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 12-2-2013 and 27-2-2013 has asked the declarant to file all the pending ST-3 returns along with penalties for late filing of returns and alleging them to have not paid any service tax and asking them to supply the details of amount booked towards construction linked payments from 1-7-2010 onwards alongwith documentary evidences. The designated authority has further held that the declarant did not respond to their Range Officer s letters dated 12-2-2013 and 27-2-2013, therefore, HQ Preventive visited the office premises of the declarant on 4-3-2013 and a case was booked for non-payment of service tax amounting to ₹ 12.87 crores against the declarant, in view of which the designated authority held that these letters constitute an evidence to attract the provisions of section 106(2)(a)(iii) of the Act. 9.1 The declarant while pleading that no inquiry, investigation or audit was pending against them as on 1-3-2013, have filed the appeal against the impugned order, primarily on the following points :- (i) That as they have filed the declaration on 17-7-2013, the show cause notice issued on 18-9-2013 is barred by limitation because as per the clarification at seria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l give a notice of intention to reject the declaration within 30 days of the date of filing of the declaration stating the reasons for the intention to reject the declaration. For declarations already filed, the said period of 30 days would apply from the date of this circular. 9.3 I further find that at serial no. 2 of its Circular No 174/9/2013-S.T., dated 25-11-2013, the Board has again clarified that the time line of 30 days for giving a notice of intention to reject the declaration is to be followed scrupulously. After going through the content of Board Circulars dated 8-8-2013 and 25-11-2013, I observe that in the instant case, the show cause notice dated 18-9-2013 was issued to the declarant beyond the stipulated period of 30 days as though the declaration was filed on 17-7-2013, but the instruction for adhering the period of 30 days for issue of notice for rejection of declaration was prescribed vide CBEC Circular dated 8-8-2013 as cited supra. Hence the time deadline for issue of notice for rejection of the said declaration dated 17-7-2013 expired on 8-9-2013. Hence, the same is not maintainable on the point of limitation itself. Further I find that the designated auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or not, it would be very essential to examine the content of both the letters in question, which I am reproducing hereunder :- (a) OFFICE OF THE SUPERINTENDENT, CENTRAL EXCISE SERVICE TAX, RANGE-I 1ST FLOOR SADASHIV COMPLEX, CHANDIGARH-AMBALA HIGHWAY, DERABASSI, DISTT. MOHALI (PUNJAB) C. No. ST-20/Misc/Letters to non-filers/DB-l/01/2012/PT/1087, dated 12-2-2013. To M/s Barnala Builders Property Consultant, SCO-I, First Floor, Opposite Yes Bank, Patiala Road, Zirakpur. Sir(s), Subject: - Non-Filing of ST-3 returns - Reg. As per Section 70 of Finance Act, 1994 read with Rule 7 of Service Tax Rules, 1994, every assessee shall submit the half yearly return by 25th of the month following the particular half year. You are registered with the department vide Registration No. AAHFB0806EST001 and have not filed due ST-3 returns till date. You are requested to file all pending returns along with appropriate penalty for late filing of ST-3 returns immediately under intimation to this office falling which action as per law will be initiated against you It is also requested to provide details of amount booked towards construction lined payments fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board from time to time for the purposes of implementation of the VCES are relevant. I find that the clarification contained at Serial No. 4 of Board s Circular No 169/4/2013-S.T., dated 13-5-2013 covers this point and hence is relevant, which is reproduced as under :- S. No. Issues Clarification 4. What is the scope of section 106(2)(a)(iii)? Whether a communication from department seeking general information from the declarant would lead to invoking of Section 106(2)(a)(iii) for rejection of declaration under the said section? Section 106(2)(a)(iii) of the Finance Act, 2013 provides for rejection of declaration if such declaration is made by a person against whom an inquiry or investigation in respect of service tax not levied or not paid or short-levied or short paid, has been initiated by way of requiring production of accounts, documents or other evidence under the chapter or the rules made thereunder, and such inquiry or investigation is pending as on the 1st day of March, 2013. The relevant provisions, beside Section 14 of the Central Excise Act as made app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious column would not attract the provision of Section 106(2)(a) even though the authority of Section 14 of the Central Excise Act may have been quoted therein. 9.5.2 Again, CBEC vide Sr. No. 3 of the Circular No. 174/9/2013-S.T., dated 25-11-2013 further specifically clarifies as to whether benefit of VCES would be available where enquiries of roving nature quoting the authority of Section 14 of the Central Excise Act in a routine manner has been initiated. Clarification contained against Sr. No. 3 of this Circular is reproduced hereunder:- S. No. Issues Clarification 3 Whether benefit of VCES would be available in cases where documents like balance sheet, profit and loss account etc. are called for by department in the inquiries of roving nature, while quoting authority of Section 14 of the Central Excise Act in a routine manner. The designated authority/ Commissioner concerned may take a view on merit, taking into account the facts and circumstances of each case as to whether the inquiry is of roving nature or whether the provisions of Section 106( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 The designated authority has also contended that the declarant has deposited ₹ 3.46 Crores during investigations by the Hqrs. Preventive. I find that on this point, the Hqrs. Preventive vide letter dated 20-12-2013 while confirming deposit of this amount of ₹ 3.46 Crores during the period from 18-6-2011 to 1-6-2013 has clarified that ST-3 return of the declarant for the period of Jan. 2013 to March, 2013 show adjustment of ₹ 85,00,000/- out of this amount and the balance amount shown in the part-C of their ST-3 return as service tax paid in advance, a part of which has been shown towards their liability for the period from April 2013 to Sept. 2013. As such, I find that the amount deposited by the declarant do not pertain to the period covered by their declaration filed under the VCES. On this point, I observe that the clarification contained at S. No. 2 and 4 of Board s Circular No. 174/9/2013-S.T., dated 25-11-2013 is relevant, which are reproduced as under :- S. No. Issues Clarification 2 An apprehension was raised that declarations are being considered for rejection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld ensure that this time line is followed scrupulously. 4 Whether the benefit of the Scheme shall be admissible in respect of any amount covered under the definition of taxes dues , as defined in the Scheme, if paid by an assessee after the date of the Scheme coming into effect, (i.e., 10-5-2013), but before a declaration is filed Yes, benefit of the Scheme would be available if such amount is declared under the Scheme subsequently, along with the remaining tax dues, if any, provided that Cenvat credit has not been utilized for payment of such amount. Example : A person has tax dues of ₹ 10 lakh. He makes a payment of ₹ 2 lakh on 15-5-2013, without making a declaration under VCES. He does not utilize Cenvat credit for paying this amount. Subsequently, he makes declaration under VCES on 1-7-2013. He may declare his tax dues as ₹ 10 lakh. ₹ 2 lakh paid before making the declaration will be considered as payment under VCES. 9.8.1 On perusal of deposit of ₹ 3.46 Crores made by the declarant, clarificatory reply submitted by Superintendent (Prev.) Hqrs. Office, Chandigarh-II ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contested this contention stating that no such order has been reviewed by him. I am constrained not to elaborate on this contention as the declarant has not placed on record any such order dated 25-11-2013 passed by the designated authority. Even otherwise this issue becomes irrelevant once the rejection of declaration is not maintainable on merit. 10. As regards department s contention that there are no provisions for filing of appeals against the order of rejection passed by the designated authority, I observe that the specific order dated 9-12-2013 of Hon ble High Court in the Civil Writ Petition No. 26929 of 2013, referred to in para 2.1 and reproduced in para 3 above, is that the impugned order is appealable and the same is operational law being not set-aside by any Superior Court and to this extent Board s instructions dated 8-8-2013 is not binding on this case. 11. To sum up, I observe that the impugned order is also not maintainable on merit as discussed above keeping in view the objectives of the VCES, which is to encourage disclosure of tax dues and compliance of service tax law by the persons who have not paid service tax dues for the period from Oct. 2007 to Dec. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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