ST - Designated authority not issuing acknowledgement of discharge in form VCES-3 - SCN issued demanding ST for period July 2012 to August 2013 - merely because the SCN is going to be adjudicated by a distinct authority does not mean that the petitioner is prevented from canvassing appropriate pleas: HC
By TIOL News Service
MUMBAI, AUGUST 09, 2015: ANURAG KASHYAP is the petitioner and the matter concerns Service Tax.
It appears that the petitioner had filed an application under the VCES, 2013 declaring ST liability of Rs.21.59 lakhs for the period July 2012 to December 2012.
Vide letter dated 23rd December, 2013 the petitioner requested adjustment of an amount relating to 50% of the declared amount of Rs.21,58,883/-. The amount of Rs.71,19,869/- recovered following the action under section 87(b) of the Finance Act, 1994, is also specifically referred.
The authority designated under the Scheme has acknowledged the declaration, that the petitioner has in terms of the declaration made the payment and furnished details to the Designated Authority under the Scheme along with a copy of the acknowledgement issued to him, but the Designated Authority has failed to issue an acknowledgement of the discharge of such dues and as is required.
The show cause notice dated 27th June, 2014in paragraph 7 analyzes the nature of the services rendered and the amounts which are required to be paid towards service tax, then, it is alleged that the asses see in paragraph 8 is supposed to have provided taxable service according to the Department in the sum ofRs.9,54,78,961/- to his client; that he charged and collected the accrued service tax thereupon, but has not discharged the tax liability amounting to Rs.1,02,12,984/- for the period commencing from 1st July, 2012 to 31st August, 2013.
The Financial Consultant appeared before the authority and admitted pending service tax liability of Rs.54.97 ankhs and that is recited in paragraph 6 of the show cause notice. Thereafter, the show cause notice refers to the pay orders forwarded by the banks to the Service Tax Department by debiting the amount available in the petitioner's bank accounts.
Apprehending that the respondent having not closed the proceedings under the scheme entitled ‘The Service Tax Voluntary Compliance Encouragement Scheme, 2013', by issuing a declaration in terms of paragraph 107(7) thereof, the show cause notice which is issued and which is required to be adjudicated proceeds on a wrong and incorrect assumption, the petitioner is before the High Court and seeks relief. The petitioner also informed that a relief has been granted in the sense the bank accounts have been released from attachment.
It is also submitted that adjudication will take place before a distinct adjudicating officer and who is not the authority in terms of the Scheme and that power is only vested in the respondent,therefore, the respondent (designated authority) be directed to act in terms of paragraph 107 of the Scheme and issue necessary declaration within the meaning of sub-para (7) thereof.
The High Court after considering the submissions observed -
+ We have no doubt that when the petitioner raises appropriate de fences and files a reply to the show cause notice or if it is already filed during the course of his submissions which could be oral, he will be able to point out that he had availed of the Service Tax Voluntary Compliance Encouragement Scheme and complied with the same particularly of the requirement or procedure for making declaration of the payment of tax dues. The authority designated under the Scheme has acknowledged the declaration, that the petitioner has in terms of the declaration made the payment and furnished details to the Designated Authority under the Scheme along with a copy of the acknowledgement issued to him, but the Designated Authority has failed to issue an acknowledgement of the discharge of such dues and as is required. In other words, that authority having not yet issued the acknowledgement of discharge in such form and in such manner as may be prescribed does not mean that the petitioner has failed to discharge his liability and, therefore, the demand should not be sustained.
+ If that certificate has not been issued and in terms of the paragraph, it would be open for the petitioner to urge that failure on the part of the authority to issue such a declaration should not visit him with any tax demand including of interest and penalty.
+ All the above contentions and others which can be raised in law can always be raised during the course of the proceedings and merely because the show cause notice is going to be adjudicated by a distinct authority does not mean that the petitioner is prevented from canvassing appropriate pleas. If any decision is taken on the show cause notice and which is adverse to the interest of the petitioner, then, while challenging and impugning the same, the petitioner can always raise such pleas as are permissible in law, including by inviting the attention of the authority to the Scheme and its clauses or paragraphs and sub-paragraphs.
Taking a view that there was no reason to keep the petition pending and entertained any further the WP was disposed of.
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(See 2015-TIOL-1784-HC-MUM-ST)
