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M/s Hotel Southson Pvt. Ltd. Versus Customs, Excise Service Tax Appellate Tribunal, The Commissioner of Central Excise (Appeals) And Others

Benefit of VCES - whether the petitioner, who is an assessee for the service tax payable for the years 2010- 11, 2011-12 and 2013-13, is entitled to file the declaration on 21.6.2013 before the fourth respondent seeking to declare that the petitioner is entitled to get the benefit of VCES in the light of Section 106(2) of the Finance Act, 2013 - Held that:- If a declaration is made by a person against whom an inquiry or investigation in respect of a service tax not levied or not paid or short-le .....

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audit, the audit party noticed that the assessee was also providing renting of immovable property service, but had not taken registration for this service nor had included this service in the service tax registration certificate and also not paid the service tax for the renting of immovable property service. Hence the matter was under consideration of audit as on 1.3.2013, which is not yet being over. Therefore, as per Section 106(2) of the Finance Act, the petitioner is not entitled to get the .....

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ja, J. For the Appellant : Mr. M. K. Kabir Senior Counsel for Mr.S.Ashok Kumar For the Respondent : Mr. V. Sundareswaran Senior Panel Counsel JUDGEMENT M/s Hotel Southson Private Limited represented by its Director K.Murugan , assailing the impugned order passed by the Assistant Commissioner (Designated Authority) in C.No.IV /16/80/2013/VCES/ S.Tax /PF dated 03.10.2013 informing the petitioner that the declaration in Form VCES-1 is rejected, has filed the present writ petition. 2. Mr.M. K.Kabir .....

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he taxes regularly without any complaint. While so, an audit was conducted on 23.2.2013 and 25.2.2013 by the officers attached to the Additional Commissioner (Audit), Salem in the premises of the petitioner company and after a month, the Superintendent of Customs, Central Excise and Service Tax sent a letter dated 16.4.2013 informing the petitioner to pay service tax under the category of renting of immovable property service for the period from 1.10.2010 to 28.2.2013 with a further direction to .....

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etitioner submitted an application dated 21.6.2013 before the Assistant Commissioner, Salem, the fourth respondent herein requesting to allow them to pay the service tax of ₹ 32,85,485/-, since the petitioner is entitled to get the benefit of VCES. The petitioner also agreed to pay a sum of ₹ 16,42,750/- as the first instalment towards service tax under the head of renting of immovable property service on accepting their declaration. On receipt of the application from the petitioner, .....

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-off date, namely, 1.3.2013, hence, on the sole ground that the audit was not completed, rejected their declaration, which is impermissible. The learned senior counsel for the petitioner submitted that the rejection of the declaration of the petitioner made by the fourth respondent is against the circular dated 25.11.2013 issued by the Government of India, Ministry of Finance, Department of Revenue clarifying the provisions of Section 106(2) of the Finance Act, 2013 that if an inquiry, investiga .....

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be liable for rejection only if the issue is identifiable from summons or letters, but no summons or letters were issued asking the production of details in respect of renting of immovable property service, therefore, the rejection of the declaration on frivolous grounds is prima facie liable to be set aside. Adding further, the learned senior counsel submitted that as the renting of immovable property service was not covered in the audit report and that the petitioner also has not obtained any .....

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he Finance Act, 1994. But the second respondent, without considering any of the legal issues, has wrongly disposed of the appeal on 17.1.2014, returning the same to the petitioner, treating it as disposed off . As against the said order, a further appeal was also preferred in Appeal No.ST/41647/2014 before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), the first respondent herein and the same was pending. However, in view of the filing of the present writ petition, the same was .....

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hout even waiting for the outcome of the matter, the demand notice dated 15.12.2014 has been issued, therefore, it is just and necessary to declare that the petitioner is entitled to get the benefit of VCES, as the petitioner has no other legal remedy. 4. Per contra, Mr.V.Sundareswaran , learned senior panel counsel for the respondents, refuting all the above contentions, urged this Court to dismiss the writ petition, on the ground that the petitioner is not entitled to file the declaration for .....

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completed on the cut-off date, namely, 1.3.2013. Since the renting of immovable property service was also under the scrutiny of audit, the petitioner is not entitled to file the declaration, hence it was rejected. Adding further, he submitted that originally internal audit had visited the premises of the petitioner for the service tax audit and conducted audit inspection on 25.2.2013 and 28.2.2013. Since the petitioner/assessee had taken service tax registration certificate for accommodation se .....

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ration of audit as on 1.3.2013. Subsequently, the objection given by the petitioner was also finalised by audit and was placed in the Monitoring Committee Meeting (MCM) held on 27.3.2013. Accordingly, the service tax payable by the service provider was worked out by the internal audit as ₹ 36,10,239/- for the periods 2010-11, 2011-12 and 2012-13 ( upto February 2013) and the same was also communicated to the petitioner in the Commissioner's letter C.No.III /10/87/2013-IA dated 9.4.2013 .....

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ejected the declaration filed by them by the impugned order, on the ground that on the reckoning date, namely, 1.3.2013, an audit was pending in respect of the assessee, hence the declaration was not eligible for VCES. Since the impugned order of rejection is in order making it clear that once the audit is initiated, the petitioner is not entitled to file the declaration for the service which are found by the initiation of audit and more particularly, the provision of renting of immovable proper .....

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able for the years 2010- 11, 2011-12 and 2013-13, is entitled to file the declaration on 21.6.2013 before the fourth respondent seeking to declare that the petitioner is entitled to get the benefit of VCES in the light of Section 106(2) of the Finance Act, 2013. In this context, it is relevant to extract Section 106(2) of the Finance Act, 2013, as follows:- "106.( 2) Where a declaration has been made by a person against whom,- (a) an inquiry or investigation in respect of a service tax not .....

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