By TIOL News Service

RANCHI, JULY 20, 2016: A VCES-1 declaration was filed by the petitioner declaring Service Tax dues of Rs.3,48,39,667/-. As per the scheme, Fifty per cent of the aforesaid amount was to be deposited on or before 31st December 2013.

The petitioner deposited Rs.1,14,20,000/- by 31st December, 2013 and for remaining Rs.60,00,000/-, a post dated cheque dated 30th January, 2014 was given to the respondent authorities on 31st December, 2013. Interest upon belated payment has also been made and aforesaid cheque was also encashed on 5th February 2014.

The petitioner was disqualified from the VCES, 2013 as they had not deposited 50% of the tax dues so declared u/s 107(1) of the FA, 2013.

They have challenged this order before the Jharkhand High Court.

Both sides made succinct submissions justifying their stand.

The High Court made the following observations and concluded that there is no ground to entertain the Writ Petition.

(a) The VCES, 2013 is already a liberal scheme floated for those declarants, who have committed breach of the taxing statute, especially in payment of Service Tax. Thus, the scheme itself is a liberal approach of the Union of India to encourage voluntary declaration.

(b) Looking to the clauses of the VCES, 2013 , especially, 107 thereof, the payment of the service tax liability is divided into two instalments. First instalment is of minimum 50% to be paid on or before 31st December, 2013, whereas the remaining amount of the service tax liability is to be discharged by the assesse- declarant on or before 30th June, 2014. This is the second liberal approach in the scheme floated by the Union of India.

(c) In the second instalment also, which was to be paid on or before 30th June, 2014, if any declarant has got any difficulty he can make the payment on or before 31st December, 2014, but, in this eventuality the payment shall be made with interest. This is another liberal approach of the Union of India as provided under the VCES, 2013.

(d) The scheme is nothing but a policy decision of Union of India and this court will be extremely slow and careful in making further liberal interpretation of the VCES, 2013, because this court is not sitting in appeal against the said scheme nor this court can replace an existing scheme with a better one. The clauses of VCES, 2013 cannot be changed by this court. If Section 107(3) directs the declarant to make the payment of atleast 50% of the service tax so declared under Sub Section 1 of Section 107, to be paid on or before December, 2013, court cannot give further instalment in the first instalment to the effect that part of the payment can be made on or before 31st December, 2013 and the remaining amount can be paid later on. This is not permissible while exercising powers under Article 226 of the Constitution of India.

(e) It appears on perusal of VCES, 2013 that the clauses of the Scheme are drafted very clearly and they are bereft of any ambiguity. What is to be paid that has already been mentioned in Section 107. We cannot replace all these sections.In a taxing statue interpretation ought to be made strictly. Court can neither replace all these clauses of VCES, 2013 nor further instalments can be given by the court in exercise of powers under Article 226 of the Constitution of the India. The so called theory argued by the counsel for the petitioner, viz. 'substantial compliance' has no place in a taxing statute, otherwise every declarant or assesse will partly comply with a scheme or provision of the taxing statute and will say that there is substantial compliance, which will lead to nothing but chaos and court cannot be a party to this.

(f) Likewise, 'No prejudice' theory in the payment of taxes cannot be advanced by the erring assessee or erring declarant. There is no question of any prejudice caused to the Union of India and once the clauses of the VCES, 2013 is violated, the declarant is not entitled to get benefit of the said scheme.

(g) Evenif the respondents (as regards acceptance and encashment of post dated cheque dated 31.01.2014) would have objected neither there was any time left with this declarant to sell over its property and make payment of the dues nor the respondents have any power, jurisdiction and authority to go against the clauses of VCES, 2013, especially 107(3) thereof to accommodate the petitioner. Cheque might have been encashed, but it makes no difference because to encash it is not a violation so far as Section 107(3) is concerned.

(h) It ought to be kept in mind that whenever such voluntary disclosure Scheme is floated, further leniency should not be given by the court to the declarant apart from what has been provided under the scheme, otherwise, there will be no end of liberal approach. Moreover, payment of tax has a direct nexus with the budget of the country. There are fixed dates for payment of taxes. Realisation of taxes after due date is a matter of policy decision of the Union of India. Hence, this court will not extend the period for the payment of tax dues unless the scheme in question gives that liberty to the declarant.

(i) There is no provision under the VCES, 2013 for relaxation in the payment of first instalment. Petitioner-declarant has committed a breach of section 107(3) of the VCES, 2013 in making the payment of first instalment and hence, he is not entitled to get the benefits provided under this scheme.

(j) Some errors might have been committed by the department in case of one or two declarant, but no benefit of those errors can be extended to the present petitioner because there is no equality in illegality committed by this respondent.

Holding that no error has been committed by the Assistant Commissioner while passing the order dated 7th April, 2014 ,the writ petition was dismissed.

In passing: Also see  2016-TIOL-1358-HC-KER-ST  &  2014-TIOL-471-HC-DEL-ST.

(See 2016-TIOL-1456-HC-JHARKHAND-ST)