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2019 (7) TMI 654

In terms of the provisions of section 73 of the Finance Act, 1994, Revenue can raise the demand for the maximum period of five years from the date of issuance of show cause notice - the period prior to five years from the date of the show cause notice cannot be re-opened by the Revenue and the demand for the said period is liable to be set aside on this ground. Admittedly the composition rules are applicable on an option exercised by the assessee. Such an option was exercised by the appellant only w.e.f. December 2010 onwards. In the absence of any option having been exercised for the period in question, the applicability of the composition rules cannot be upheld. As such the demand has to be quantified in terms of the provisions of Rule 2A .....

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Revenue undertook investigations and found that the evasion amount was much more than the declared amount. 4. Accordingly proceedings were initiated against them by way of issuance of show cause notice dated 25 June 2014 proposing to reject their VCES declaration and confirming the demand of Service Tax to the tune of around ₹ 31.32 Lakhs (approx.). The said show cause notice resulted in passing of the present impugned order by the Commissioner vide which he confirmed the demand to the extent of ₹ 31.32 Lakhs and also held the appellant liable to penalty under section 78 of the Finance Act. However, while imposing penalty, he took into consideration the amount of ₹ 8.88 Lakhs already deposited by the appellant under VCES .....

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be applicable for the prior period, especially when they were not even registered with the Revenue. As such submits the learned Advocate that their tax liability for the earlier periods have to be calculated in terms of the provisions of Rule 2A of Service Tax (Determination of Value) Rules, 2006. He clarifies that for the period in question, all the contracts entered by them with their customers separately show the value of the goods as also the value of the services and are clearly bifurcable. They have paid VAT on the goods involved for which purposes there is VAT assessments orders by VAT authorities. As such it was possible for the Revenue to calculate the tax liability in terms of the provisions of Rule 2A of the Service Tax Value Ru .....

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As such the demand has to be quantified in terms of the provisions of Rule 2A of Service Tax Valuation Rules, by taking into account the VAT assessment orders. 9. In view of the above, we set aside the impugned order and remand the matter to the adjudicating authority for fresh quantification of the demand against the appellant for the period falling within five years from the date of show cause notice. 10. As regards the Revenue s appeal, the same is only against the adjustment of the deposits already made by the appellant in terms of the provisions of VCES scheme. We note that the VCES declaration filed by the assessee was not finalized and in fact the same is the subject matter of the present impugned order. As such any deposits made by .....

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