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Commissioner of Service Tax Commissionerate Versus Parijat Vyapaar Private Limited And Others

2016 (3) TMI 351 - CALCUTTA HIGH COURT

Failure to deposit 50% under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) - Admittedly, the respondent nos. 1 and 2 made a declaration in VCES Form I declaring that a sum of ₹ 11,49,32,357/- was due as service tax and intended to make payment of 50% of the dues under VCES. However, by letter dated 24th December, 2014, the writ petitioners had indicated the manner in which the tax dues were to be paid and also prayed for adjustment with the income tax refund which, .....

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that Court by its observations cannot enlarge the time frame as has been done in the instant case. Rather non-payment of 50% of the declared tax dues or other dues under section 107(3) empowers the service tax authority to proceed under section 87 and also under section 89 of the Act, which in the instant case has been initiated. - Decided in favor of revenue. - M.A.T. No. 1122 of 2014 with C.A.N. No. 7087 of 2014 - Dated:- 7-8-2015 - Soumitra Pal And Mir Dara Sheko, JJ. For the Appellant : Mr S .....

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ing service tax registration under Chapter V of Finance Act, 1994 and the petitioner no. 2, a director of the petitioner no. 1, moved a writ petition affirmed on 31st March, 2014 upon notice to the appellant herein. Prayers in the writ petition, relevant for consideration, are as under: "(a) A writ and/or in the nature of Mandamus be issued commanding the respondents, their men, servants, agents or assigns to forthwith :- (i) Quash, rescind, recall, set aside, cancel and/or revoke the impug .....

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the Scheme for payment of the balance 50% of the declared tax dues ; (iv) Declaration that the petitioner is entitled to adjustment and/or deduction of its Income Tax Refund from the payments to be made under the Scheme of 2013; (v) Direct the respondent No. 3 herein, to accept the payments to be made by the petitioner as payments towards the balance of the 50% of the tax dues under the Scheme of 2013 ; (vi) Refrain the respondent authorities from refusing to allow the eligibility and benefits .....

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of 2013. *** *** *** *** ** (d) An order of injunction be passed restraining the respondents, their men, agents, servants and assigns from giving any effect and/or further effect and/or taking any steps or further steps pursuant to the declaration given by the petitioner under the Scheme of 20132 and in directing the respondent No. 3 to accept all payment made by the petitioner towards the declaration of tax dues as payment under the Scheme of 2013." The writ petition was moved and disposed .....

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*** *** *** *** ** My endeavour has failed to find out from the provision of the said scheme that once a default is committed for non-compliance of the provisions contained therein relating to the deposit, the declarant shall be thrown outside the ambit of the said scheme and shall be thrown in the pool of chapter containing the service tax. Section 110 of the said Act clearly indicates that in the event of the default of the payment either fully or in part, the balance amount would be recovere .....

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der Section 96 shall not be available to the defaulting declarant. The aforesaid provisions have to be read conjointly with section 110 of the said Act. If default is committed under the scheme the consequences provided in the scheme is to be adhered to and the authority cannot travel beyond the boundaries set therein. The benefit under the scheme is provided to a person against whom no enquiry or investigation or other proceeding are initiated. Section 106 of the said Act makes the position cle .....

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ction 107. The authorities can take recourse under Section 110 of the said Act, in the event any default is committed under the scheme. With these observations, this Court dispose of this writ petition. It is to be noted that Service Tax Voluntary Compliance Encouragement Scheme, 2013 (for short "VCES ), which came into effect from 10th May, 2013, was introduced to encourage disclosure of service tax dues and compliance of Service Tax law by the persons who have not paid service tax dues fo .....

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such manner as may be prescribed. Section 107(3) postulates that the declarant shall, on or before the 31st day of December, 2013 pay not less than fifty per cent of the tax dues so declared under section 107(1) and submit proof of such payment to the designated authority. Section 107(4) stipulates that the tax dues or part thereof remaining to be paid after payment made under subsection (3) shall be paid by the declarant on or before the 30th day of June, 2014 provided where the declarant fails .....

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fore, the direction of the learned Single Judge that the authorities can take action under section 87 of the Act is contrary to law. Submission was the learned Judge failed to appreciate that though the respondents herein declared their service tax liability, however, as they failed to pay 50% of the declared amount within 31st December, 2013, the authorities had applied before the appropriate forum under section 91 of the Service Tax Act for the offences under section 89(1)(d). Moreover, the le .....

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hich is annexed to the application for stay, it was submitted that it is evident from the letter dated 24th December, 2013, issued by the respondent nos. 1 and 2 herein, that the company did not pay 50% of the service tax dues and sought for adjustment with its income tax refund which was beyond the purview of the VCES. Thus, the issuance of VCES Form II acknowledging the declaration under VCES Form I, as contended in the writ petition, does not arise. Accordingly, the statements in the writ pet .....

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h December, 2013 has gone unchallenged. Therefore, it was submitted that as the writ petition is without substance, the appeal may be allowed setting aside the impugned order. Mr. Mainak Bose, learned advocate for the respondent nos. 1 and 2/writ petitioners submitted that as prosecution was pending against the writ petitioners, they had filed a declaration under VCES Form I declaring to pay 50% of the tax dues and the department had issued VCES Form II acknowledging the filing of the declaratio .....

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rvice tax and intended to make payment of 50% of the dues under VCES. However, by letter dated 24th December, 2014, the writ petitioners had indicated the manner in which the tax dues were to be paid and also prayed for adjustment with the income tax refund which, as evident from the letter dated 26th December, 2013, was rejected by the service tax authorities. The question is, whether the respondent nos. 1 and 2 were entitled under VCES to seek adjustment of service tax dues against the income .....

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it petitioners did not come under the purview of the VCES. Consequently they are not entitled to the benefits under VCES. The argument of Mr. Bose that the appellant by issuing VCES Form II had accepted the mode and manner of payment of tax due cannot be accepted as nothing is on record from which it can be inferred that the service tax authority had accepted the declaration of the petitioners. Rather the service tax authorities, as noted, by letter dated 26th December, 2013 had rejected the pra .....

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