TMI Blog2015 (11) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... limit prescribed under the Scheme, the petitioner in due compliance with the provisions of the section 107 of the Act, submitted a declaration under sub-section (1) thereof and paid more than fifty per cent of the tax dues before 31st December, 2013 as required under sub-section (3) thereof and in order to comply with the provisions of sub-section (4), viz. payment of the remaining amount, requested for adjustment of an amount of ₹ 6,36,103/- paid under the wrong accounting code of interest and penalty to the correct code of service tax, which request was duly acceded to by the respondent authorities and such correction was made before 30th May, 2014. When the entire amount as contemplated under the Scheme stood paid before the due date and the petitioner satisfied all other requirements under the Scheme, the respondents are not justified in denying the benefit of the Scheme to the petitioner only on the ground that the amount of ₹ 6,36,103/- had initially been paid towards the interest and penalty. The impugned communication/order which seeks to deny the benefit of the Scheme to the petitioner under such hyper technical plea, therefore, cannot be sustained. - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 3 48,100/- 48,100/- 219 dated 26.07.2013 Para 4 2,76,739/- 1,97,251/- 4,73,990/- 224 dated 26.07.2013 Para 5 12,97,785/- 12,97,785/- Total 20,60,569/- 5,83,537/- 1,00,666/- 27,44,772/- 5. The Union of India introduced a Scheme being the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (hereinafter referred to as the VCES ) as Chapter VI of the Finance Act, 1994 vide Finance Act, 2013. The Service Tax Voluntary Compliance Encouragement Rules, 2013 (hereinafter referred to as the rules ) came to be notified vide notification dated 13.05.2013. The rules prescribed the form and manner of declaration, form and manner of acknowledgment of declaration, manner of payment of tax dues and form and manner of issuing acknowledgment of discharge of tax dues under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the provisions of VCES, the person making declaration under form VCES-1 has to pay minimum 50% of the tax dues declared on or before 31.12.2013. By a letter dated 17.12.2013, the petitioner informed the respondent No.3 Assistant Commissioner of Service Tax, Ahmedabad that in addition to payment of ₹ 12,47,285/- against the tax dues declared amounting to ₹ 20,63,597/-, additional payment of ₹ 3,08,305/- has been made. Thus, a total amount of ₹ 15,55,590/- (75% of the tax dues declared) was paid by the petitioner and only an amount of ₹ 5,08,007/- was left to be paid. Therefore, the petitioner had fulfilled the mandatory condition of payment of 50% of the declared tax dues on or before 31.12.2013. By a letter dated 14.05.2014, the petitioner requested the third respondent for change in the accounting code of penalty and interest. The Assistant Commissioner of Service Tax, Ahmedabad, by a letter dated 21.05.2014, requested the e-Pay and Accounts Office, Service Tax, Mumbai to rectify the wrong accounting head selected by the petitioner for payment of service tax and change the accounting code of above paid interest and penalty to service tax. By a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore the same is now tax dues and therefore may be adjusted against total tax dues declared under VCES-1 is not convincing as the said amount is nothing but interest only which has been confirmed by the Audit and also correctly quantified and mentioned in the final audit report dated 11.10.2013 and was paid accordingly at the material period. Now, the plea of the declarant that the same was paid wrongly at the material period is nothing but an after thought so as to escape from service tax liability to the tune of ₹ 6,36,103/-. The third respondent accordingly, concluded that the petitioner is not eligible under VCES for the reason of not fulfilling the conditions of sub-section (4) of section 107 of the Finance Act, 2013 and consequently the declared amount of ₹ 6,36,103 was liable to be recovered from the petitioner under the provisions of section 87 of the chapter as specified in section 110 of Finance Act, 2013 without immunity, that is, penalty and interest which was otherwise available under section 108 of the Finance Act, 2013 in respect of total tax dues of ₹ 20,63,597/- declared under VCES-1. Being aggrieved, the petitioner has filed the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not result in being assessed to duty which was otherwise not payable. The court was of the opinion that this would be a case of manifest injustice and on the face of it erroneous. 11.2 Reliance was also placed upon the decision of this court in the case of S. R. Koshti v. Commissioner of Income Tax, (2015) 276 ITR 165 (Guj.) ,wherein the court has held thus: 18. The position is therefore that, regardless of whether the revised return was filed or not, once an assessee is in a position to show that the assessee has been over-assessed under the provisions of the Act, regardless of whether the over-assessment is as a result of assessee's own mistake or otherwise, the Commissioner has the power to correct such an assessment under section 264(1) of the Act. If the Commissioner refuses to give relief to the assessee, in such circumstances, he would be acting dehors the powers under the Act and the provisions of the Act and therefore, is duty bound to give relief to an assessee, where due, in accordance with the provisions of the Act. 19. In the present case, the respondent Commissioner has no where stated that the petitioner is not entitled to the relief under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme which has been brought in force by a statutory amendment. It was submitted that in the present case, the petitioner had himself informed that the amount in question to the tune of ₹ 6,84,203/- had been paid towards the interest and penalty. Therefore, the amount paid towards interest and penalty cannot be considered as tax amount and consequentially, cannot be adjusted against the tax dues declared by the petitioner. The third respondent was, therefore, justified in holding that the petitioner had failed to pay ₹ 6,84,203/-. 12.1 Referring to the impugned letter/communication, it was pointed out that in terms of the circular No.170/5/2013-ST dated 8th August, 2013, it has been clarified that if the declarant fails to pay at least 50% of declared amount of tax dues by 31st December, 2013, he would not be eligible to avail of the benefit of the scheme. Accordingly, on the same analogy, if the remaining amount is not paid upto 30.06.2014 without interest or upto 31.12.2014 with interest, the declarant would not be eligible to avail of the benefit of the scheme. It was submitted that in the present case, as the petitioner had not paid the entire amount of ₹ 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 107 of the Act is concerned, there is no dispute. What is disputed is compliance with the provisions of sub-section (4) of section 107 of the Act, inasmuch as, it is the case of the respondents that the remaining tax dues have not been paid by the petitioner before 30th June, 2014. The proviso to section 107 of the Act provides for the payment of the declared amount on or before 31st December, 2014 along with interest thereof as prescribed thereunder. Sub-section (6) of section 107 of the Act provides that the declarant shall furnish to the designated authority details of payment made from time to time under the scheme along with a copy of acknowledgment issued to him under subsection (2). Sub-section (7) of section 107 provides that on furnishing the details of full payment of declared tax dues and the interest, if any, payable under the proviso to sub-section (4), the designated authority shall issue an acknowledgment of discharge of such dues to the declarant in such form and in such manner as may be prescribed. Under section 108 of the Act, the declarant, upon payment of the tax dues declared by him under sub-section (1) of section 107 and the interest payable under the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied and that the amount not having been paid within due date prescribed under sub-section (4) of section 107 of the Act, the petitioner is not entitled to the benefit under the Scheme. 17. In view of the facts narrated hereinabove, it is evident that before 30th May, 2014, the amount of ₹ 6,36,103 came to be adjusted to the correct accounting head of service tax. Accordingly, an amount of ₹ 6,36,103/- stood paid under the head of service tax. For the purpose of the provisions of subsection (3) of section 107 of the Act not less than fifty per cent of the tax dues declared under sub-section (1) have to be paid to the designated authority, the compliance of which is not disputed inasmuch as the petitioner had deposited an amount of ₹ 14,27,494/- pursuant to the declaration filed under the scheme. Under sub-section (4) of section 107 of the Act, the remaining part of the tax dues has to be paid by the declarant on or before 30th June, 2014 which also stood paid before 30th May, 2014, in view of the adjustment of the amount paid under the wrong accounting code to the correct accounting code of service tax. Therefore, before the 30th day of June, 2014, the total a ..... 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