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M/s. Indokem Ltd. Versus The Union of India And Others

2015 (3) TMI 633 - BOMBAY HIGH COURT

Entitlement for availing the scheme of Voluntary Compliance Encouragement Scheme (VCES) - rejection of declaration - petitioner pointed out that though ST 3 returns were filed earlier but they are eligible for the scheme as true liability was not disclosed at the time of filing of ST 3 returns. - Held that:- the authority undertakes the task of bifurcating or computing the liability by showing some disparity or difference in the figures of the service tax returns, and the disclosures or the decl .....

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do not see how therefore the clauses of the scheme would enable the authority to come to this conclusion. The further stipulation in the scheme and particularly the Service Tax Voluntary Compliance Encouragement Rules, 2013, indicate as to how the Designated Authority ought to have dealt with the declaration in terms of the scheme. It may be that the eventual order or direction would uphold the declaration or while upholding it issue such other orders and directions, as are permissible in the sc .....

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D H Nadkarni & M/s Legal Solutions, Advs. For the Respondents : Mr Pradeep S Jetly & Ms Suchitra Kamble, Adv. ORDER P.C. This Writ Petition challenges the order dated 30th June, 2014, which has been passed by the Designated Authority (Respondent No.3 ). The said Authority was implementing a Voluntary Compliance Encouragement Scheme (hereinafter referred to as VCES , for short). 2. The Petitioner's grievance is that it is a company incorporated under the Companies Act, 1956, engaged, .....

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challenge failed. 4. Eventually, the petitioner in terms of the half yearly returns computed the service tax liability. However, because of the on going litigation, the computation was not in terms of the relevant statutory provisions and Rules. The Government of India in the Budget of 2013, proposed the above scheme so as to encourage voluntary compliance. The broad features of the scheme are indicated and if parties like the petitioner who have not made a declaration in terms of the liability .....

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s acknowledged and after that the petitioner paid the entire service tax in one installment. 5. Thereafter a notice to appear for a hearing was issued and duly received by the petitioner. At such a hearing, the third respondent rejected the application/declaration. That is how this writ petition has been filed. 6. Mr.Shah appearing on behalf of the petitioner submits that the order passed by the third respondent to the extent it rejects the declaration is ex-facie without jurisdiction. It is lia .....

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be traceable and to the scheme itself. The only power which the said third respondent derives is in terms of the first proviso to Section 106(1) of the Finance Act, 1994. The reading of this proviso as also the scheme would indicate that there is no power conferred in the Respondent No.3 . If the scheme can be availed of by non filers or stop filers or persons who had not made a truthful declaration in the return, then, the application should have been scrutinized in its entirety. He, therefore, .....

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nt no.3 to conclude that in the general value declared in the ST 3 returns, the figure either is more or equal to the value declared in the VCS except during certain months where the value of service provider shown in the VCS declaration is higher then the value of the service provider declared in the respective ST 3 return. Mr.Jetly submits that something over and above the value declared in the declaration is to be taken into consideration. That is how the break up has been given. The order, t .....

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dismissed. 8. With the assistance of both counsel we have perused the writ petition and all the annexures. The third respondent had before it the declaration / application filed. That is filed by the petitioner declaring tax dues in respect of the above services . The Voluntary Compliance Encouragement Scheme was invoked by the petitioner, so as to make a declaration of the service tax liability . The authority has referred to the fact that on scrutiny of the annexures/calculation sheets submit .....

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aration for the period, as envisaged under the first proviso to Section 106(1) of the Finance Act. Therefore, a notice dated 26th December, 2013 proposing rejection of this declaration relating to renting of immovable property service for the tax dues of ₹ 31 ,54,010 /- was issued. 9. The petitioner had appeared and pointed out that though ST 3 returns were filed earlier but they are eligible for the scheme as true liability was not disclosed at the time of filing of ST 3 returns. Therefor .....

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gures indicated in the scheme or make his own calculation so as to bifurcate the declaration or the liability in terms thereof, has not been indicated in the impugned order at all. If the persons like the petitioner can make the declaration and in terms of the scheme, then, there should be something in the enactment and namely the Finance Act so as to make the bifurcation or a breakup of the liability to pay tax. The respondent no.3 has referred to Section 106(1) of the Finance Act and the provi .....

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herance of such disclosure would disable the parties like the petitioner from presenting the declaration in the scheme. Mr.Jetly was unable to point out any provision by which parties like the petitioners are not eligible for the VCS scheme. The contravention of the first proviso has been highlighted in the impugned order. In that regard what we find is that the Service Tax Voluntarily Compliance Encouragement Scheme, 2013, is referable to chapter VI of the Finance Act, 2013, the definitions the .....

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etitioner pertains to this period and that the tax or the dues has not been paid on 1st day of March, 2013. What has been indicated by clause 106 is that any person may declare his tax dues in respect of which no notice or order of determination under Sections 72 or 73 or 73(a) of the Chapter has been issued or made before the 1st day of March 2013, provided any person who has furnished return under Section 70 of the Chapter and disclosed his true liability but had not paid his tax amount for th .....

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