By TIOL News Service

CHENNAI, JUNE 29, 2015: THE issue involved in this writ petition is, whether an appeal under Section 85 of the Finance Act, 1994 would lie as against the order of rejection of declaration passed by the designated authority under Section 106(2) of the Act, 1994? (under VCES Scheme)

The main contention raised on behalf of the respondent department is that VCES scheme does not have a statutory provision for filing appeal against the order of rejection of declaration under Section 106(2) passed by the designated authority and that the appeal preferred by the petitioner under Section 85 of the Act, 1994 would not lie since the said provision provides appeal only as against the orders passed by the adjudicating authority and in the present case, the 2nd respondent (Assistant Commissioner) who passed rejection order, cannot be construed as an adjudicating authority, but only as a designated authority.

After examining the rival contentions, the High Court held:

In similar circumstances, the Punjab and Haryana High Court, in its decision in M/s.Barnala Builders's case, 2013-TIOL-1016-HC-P&H-ST has categorically held that the order passed under VCES is appealable.

Clause (1) of Section 85 denotes that any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Commissioner of Central Excise may appeal to the Commissioner of Central Excise. In terms of Section 65B (55) of the Act, 1994, the definition "adjudicating authority" available under Section 2(a) of the Central Excise Act, 1944 would equally apply to the Finance Act, 1994.

Though the second respondent has been described as a designated authority, however, a perusal of the order, dated 15.11.2013 passed by him clearly shows that he has dealt with the issue on merits regarding the eligibility of the assessee/petitioner to avail the VCES scheme and passed a detailed order. When the authority, the second respondent herein has given a categorical finding on going through the facts and circumstances of the case by applying his mind, his decision, would fall within the meaning of "adjudication" which is meant by settled law that "giving or pronouncing a decision or order judicially" and thereby, the second respondent has acted as an adjudicating authority and not as a designated authority.

It is relevant to note that the Service Tax Voluntary Compliance Encouragement Scheme, 2013 has been introduced by the Central Government, in exercise of the powers conferred by sub-sections (1) and (2) of section 114 of the Finance Act, 2013 with effect from 13.5.2013 by Notification 10/2013 and hence, it is not a self-contained code, but is to be construed as a part and parcel of the Chapter V of the Act, 1994 in view of the contents of section 105 of the Finance Act, 2013. Therefore, when the said scheme itself is construed as part and parcel of the Finance Act, all other provisions of the Act except to the extent specifically excluded would automatically apply to proceedings under the scheme and consequently, the order, dated 15.11.2013 passed by the Assistant Commissioner of Central Excise, the second respondent herein is appealable under Section 85 of the Act, 1994.

Accordingly, the High Court directed the Commissioner (Appeals) to take up the appeal filed by the Petitioner.

(See 2015-TIOL-1504-HC-MAD-ST)