By TIOL News Service

MUMBAI, JUNE 06, 2016: THE appellant filed VCES-1 declaration on 21/12/2013 for total dues of Service Tax of Rs.6,36,320/-. As per section 107 of the Scheme, the appellant was supposed to deposit 50% amount i.e. Rs.3,18,160/- on or before 31/12/2013 out of which they paid Rs.3 lacs on 28/12/2013 and remaining amount of Rs.18,160/- was paid on 02/01/2014.

The balance 50% was deposited on 28/03/2014.

The designated authority issued SCN on 24/04/2014 proposing rejection of VCES-1 declaration on the ground that the 50% amount was not paid on or before due date i.e. 31/12/2013.

The adjudicating authority upheld the allegations and Commissioner (Appeals) rejected the appeal of the declarant.

Before the CESTAT, the appellant submitted that after paying the amount of Rs.3 lakhs on 28/12/2013, the small balance amount of Rs.18,160/- was attempted to be deposited on 31/12/2013 but due to system error this balance amount could not be deposited & which was subsequently paid on 02/01/2014 . The appellant produced snap shot (screen shot of), bank website as a token of proof of their attempt to make payment on 31/12/2013. Inasmuch as since it was beyond the control of the appellant, due to system error, delay, if any, that occurred should be condoned and accordingly the declaration could not have been rejected.

It is also submitted that as per the Board Circular no. 170/05/2013-ST dated 08/08/2013, designated authority is under obligation to issue show cause notice, if he intends to reject the declaration within 30 days from the date of declaration. In the present case, as per Circular, notice should have been issued within the one month from date of filing the declaration but the notice was issued on 24/04/2014, therefore, notice is time barred.

The AR submitted that there is no provision in the VCES statute for extension of time limit or condonation of delay for deposit of 50% amount, therefore, under any circumstances, the extension cannot be granted beyond 31/12/2013. Reliance is placed on the Gujarat High Court decision in Ramilaben Bharatbhai Patel vs. UOI [ 2014-TIOL-678-HC-AHM-ST ].

In the matter of the SCN, the AR adverted to the Circular dated 08/08/2013 and emphasized that the same is in relation to deficiency or mis-declaration, if noticed, in the declaration filed by the assessee. And as regards the deposit of amount, provision is made under section 107 and there is no provision either in the scheme or in the circular for issuance of show cause notice for the failure of compliance of deposit provided under section 107, it was stated.

The Bench after considering the submissions observed -

"7. I find that the fact of the case is not under dispute. The appellant admittedly have not paid 50% of the total dues declared by them of Rs.3,18,160/- on or before 31/12/2013. Though they have shown reason for non-payment of balance amount of Rs.18,160/- on 31/12/2013 which was subsequently made on 02/01/2014. Even if the reason given is accepted there is no provision in the scheme to condone the delay in payment, therefore, time limit prescribed under the scheme cannot be extended in absence of any provision for condoning the delay. The Hon'ble High Court of Gujarat on identical issue categorical held that time line provided under the scheme under section 107 cannot be extended. As regards the submission of the ld. Counsel that the show cause notice was not issued within one month from the filing of declaration I agree with the submission of the ld. AR. Provision for issuance of show cause notice has been provided under the Circular is only under section 106(2) which provides that if any deficiency or error is found in the declaration filed under section 106(2) notice required to be issued, whereas in case of deposit of an amount as provided under section 107 there is no provision for issuance of any notice. Since the date of deposit which is later than the filing of declaration, it cannot be expected from the designated authority to issue any notice. Therefore non-issue of notice within one month from the date of declaration cannot be a reason for vitiating the entire proceedings. In my opinion, even the notice given on 24/04/2014 was also not required for rejecting the declaration, however, it is appreciable that in order to follow the principles of natural justice the designated authority given an opportunity to the appellant by issuing a notice…."

Holding that there is no infirmity in the impugned order, the same was upheld and the appeal was dismissed.

In passing: This is what the same Bench held in the cases of -

++ Cityland Associates - 2016-TIOL-812-CESTAT-MUM:

ST - 50% amount of tax dues under VCES deposited on 01.01.2014 as applicant could not make payment on 31.12.2013 due to system fault - No infirmity in order of Commissioner (A) accepting such payment towards compliance of first tranche of VCES, 2013: CESTAT.   

++ Renuka Mangal Seva Kendra - 2016-TIOL-921-CESTAT-MUM

ST - VCES, 2013 - Tax dues were declared incorrectly due to arithmetical error and the appellant  suo motu  pointed out the same & made good the balance payment along with interest by 31.12.2014 - It cannot be said that there was an intention on the part of the appellant to make a substantially false declaration - Application to be accepted under the Scheme: CESTAT [para 5]

(See 2016-TIOL-1344-CESTAT-MUM)