ST - Appellant had in VCES-1 declaration mentioned about DGCEI letter and, therefore, notice proposing to reject declaration is clearly time barred - Board Circular binding on designated authority: CESTAT
By TIOL News Service
MUMBAI, OCT 14, 2015: UNDER the ST VCES, 2013, the appellant had filed a VCES-1 declaration on 28.6.2013. Thereafter, the appellant made full payment of tax dues declared under the VCES and furnished the proof of such payment to the designated authority vide letter dated 25.7.2013.
The VCES-1 declaration filed by the assessee was sent to different agencies for verification and report with detailed comments on the issue regarding admissibility and correctness of the claim was called from them.
The DGCEI, Mumbai reported that an enquiry was initiated against the assessee and they were asked to furnish documents under Rule 5A of the STR, 1994 and, therefore, assessee's application falls under the provisions of Section 106(2)(a)(iii) of the FA, 2013 and the assessee is not eligible to make any declaration under VCES scheme.
ASCN dated 15.10.2013 was issued by the designated authority requiring the appellant to explain as to why their VCES-1 declaration should not be rejected as not being eligible for VCES, 2013.
By an Order-in-Original dated 30.12.2013, the declaration filed by the appellant was rejected holding that since DGCEI had required the appellant to submit documents under the provisions of Section 14 of the CEA, 1944, the case is squarely covered under Section 106(2)(a)(iii).
The Commissioner(A),taking the support of the Punjab & Haryana High Court decision in Barnala Builders & Property Consultants - 2013-TIOL-1016-HC-P&H-ST, admitted the appeal but dismissed the same by upholding the order of rejection.
The appellant is before the CESTAT.
It is submitted that they had made a true declaration dated 28.6.2013 annexing a copy of letter dated 20.09.2012 received from DGCEI and, therefore, the notice dated 15.10.2013 for rejection was time barred. Inasmuch as CBE&C vide Circular 170/5/2013-ST dated 8.8.2013 has clarified that the designated authority, if he has reason to believe that the declaration is covered by Section 106(2), shall give the notice of intention to reject the declaration within 30 days of filing of the declaration, stating the reasons for proposed rejection. Not having followed the Circular, the SCN dated 15.10.2013 is time barred, the appellant reiterated.
It is further submitted that the enquiry letter of the DGCEI is of a roving nature making only a general enquiry with respect to whether the appellant is registered under the provisions of Central Excise & Service Tax; asking the appellant to submit the documents like, registration certificates, copy of the balance-sheet and audit reports, print out of account statements relating to business transaction, copy of agreements for services provided, copy of bills raised, details of payment received from the clients. And in view of CBE&C Circular No. 174/9/2013-ST dated 25.11.2013, sr. no.3, clarifying that the benefit under VCES should not be denied if a roving enquiry is made, the rejection of their application is improper. Further, neither any summons have been issued to the appellant nor there was any search before the date, i.e. 1.3.2013 for they being shunted out of the scheme.
So far the issue of limitation is concerned, although time limit of one year is prescribed under Section 111(2) of FA, 2013, the same is applicable only in circumstances where the Commissioner has reasons to believe that the declaration made under the scheme is substantially false, which is not the case in respect of the appellant.
Accordingly, the appellant urged the Bench to setaside the impugned order and direct for acceptance of their declaration under VCES.
The AR did not have much to add except reiterate the stand taken by the lower authorities.
The CESTAT observed -
"…I find that the impugned order is vitiated due to factual error. It is evident from the documents on record, a copy of which have been filed with the appeal memo i.e. the forwarding letter dated 28.6.2013 along with the declaration filed by the appellant of even dated in both (forwarding letter and declaration form), the appellant have categorically mentioned regarding the letter received from DGCEI dated 20.9.2012. Thus, I hold that the notice dated 15.10.2013 proposing to reject the declaration is clearly time barred in view of the clarificatory circular issued by CBE&C, as noticed herein above. It has been held in several rulings by the Tribunal and High Court that the circular and instructions of CBE&C are binding on the departmental officers and as such the Circular is also binding on the designated authorities. I also hold that the letter dated 20.9.2012, of DGCEI, is of roving nature and as such does not attract the rejection of the declaration on the grounds mentioned in Section 106(2)(a)(iii), as the said letter does not amount to an inquiry or investigation in respect of Service Tax not levied or not paid or short levied or short paid. Thus, the impugned order is set aside…."
The appeal was allowed and the Designated Authority was directed to issue acknowledgement [VCES-3] as provided under Section 107(7) of the Finance Act, 2013 within a period of 15 days from receipt of the order.
(See 2015-TIOL-2197-CESTAT-MUM)
