TMI Blog2018 (6) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of renting of immovable property service was unearthed during the course of audit. Held that:- Once it is shown that an audit has been initiated and it is pending, there is no scope for restricting the sweep of Section 106(2)(b) to an audit in relation to a particular kind of service. If at an audit, the department is able to unearth a service being rendered by the assessee, which has neither been registered nor been assessed to, it is definitely open to the department to require the assessee to pay the service tax and the penalty payable for providing such service. The rigour of such taxing statute cannot be whittled down by the appellant by seeking to invoke so called voluntary compliance that too after the fact that the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices. 4. The Superintendent of Customs, Central Excise and Service Tax, Salem I, on 16.04.2013 issued a letter to the appellant pointing out that the appellant has not paid the Service Tax payable for the service of renting of immovable property for the period from 01.10.2010 to 28.02.2013. The Service Tax liability for the said period was assessed at ₹ 36,10,239/- and certain penalties to the tune of ₹ 26,300/- were also proposed. Thereafter, on 21.06.2013, the appellant wrote to the 4th respondent, viz. the Designated Authority for VCES Scheme seeking to declare the income from the renting of immovable property service as a voluntary disclosure and sought for the benefits of the scheme. The said request of the appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of (i) search of premises under section 82 of the Chapter; or (ii) issuance of summons under section 14 of the Central Excise Act, 1944, as made applicable to the Chapter under section 83 thereof; or (iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or (b) an audit has been initiated, and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall by an order and for reasons to be recorded in writing, reject such declaration. 9. Section 106(2) lists persons who are not eligible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the service of renting of immovable property. Since no inquiry or investigation or audit was pending against the appellant in respect of the specific service viz. renting of immovable property service, which the appellant wants to declare voluntarily, as per the declaration dated 21.06.2013, the Designated Authority, viz. the 4th respondent was not justified in rejecting the declaration on the ground that an audit was pending on 01.03.2013. 12. Per contra, Mr.V.Sundareswaran, learned Senior Panel Counsel appearing for the Department would contend that the audit that was conducted on 25.02.2013 and 28.02.2013 was a General Audit and it was not a piece meal audit for a particular service. According to the learned Senior Standing Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the VCES scheme, the first one is pendency of an inquiry or investigation in respect of Service Tax not levied or not paid or short levied or short paid initiated pursuant to a search of the premises, issuance of summons under Section 14 of the Central Excise Act 1944, or requiring production of accounts or other evidence under the Finance Act, 1994, are the Rules made there under. Of course, the above would only be in relation to a service which has already been registered, Section 106(2)(b) stands independent of Section 106(2)(a), it only says where an audit has been initiated and such audit as pending on 01.03.2013. The clarification issued by the Department on 25.11.2013 further directs that the condition should be construed strict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch of the Uttarkhand High Court had an occasion to consider the scope of Section 106(2) of Finance Act, 2013, had observed as follows: Quite clearly, the intention of the Legislature appears to have been, undoubtedly, to entice large number of persons into paying the service tax dues with the assurance that, if the terms of the Scheme are complied with, they will not have to pay penalty and interest. This is, undoubtedly, for alluring such persons so that there is an increase in the revenue of the Government. But, at the same time, the Legislature was conscious of the criticism that could be levelled against such a Scheme being in the nature of promotion of dishonesty. It, therefore, felt that the scheme should be limited to those case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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