Appeal can be filed against the rejection for declaration

By | November 7, 2015

It is for the designated authority to decide whether the show-cause notice has to be issued or not. So also it is within the control of the designated authority to decide whether the decision arrived has to be in the form of an order passed or in the form of letter. In the present case, the designated authority has unilaterally chosen to waive the issuance of show-cause notice and informed his decision of rejection of declaration in the form of a letter issued to the respondent. This is beyond the control of the respondent. The remedy by way of filing of an appeal cannot be taken away from the respondent merely on the failure of the designated authority to issue show-cause notice or pass an order in proper format. Further the argument of the Revenue that the only remedy available is to file writ petition does not make any sense.

CESTAT, NEW DELHI BENCH

Commissioner of Service Tax, Delhi

v.

Bharti Lakhani

SMT. SULEKHA BEEVI C.S., JUDICIAL MEMBER

FINAL ORDER NO. 52828/2015
APPEAL NO. ST/50449/2015-ST-SM ST/CO/50713/2015

SEPTEMBER  10, 2015

G.R. Singh, AR for the Appellant. Akhil Gupta, CA for the Respondent.

ORDER

1. The respondent is a proprietorship firm engaged in the activity of “renting of immovable property service” and is registered with the Service Tax Department. The scheme called Voluntary Compliance Encouragement Scheme (VCES), 2013 was floated by the Government under the Finance Act, 2013. The scheme offered immunity from payment of interest and penalty to the tax payer who was in default. A condition was prescribed that the declarant has to deposit 50% of declared tax dues before 31.12.2013 so as to be included in the scheme. The respondents filed their application in Form VCES-1 dated 30.12.2013 declaring the tax dues as Rs. 4,64,663/- and also deposited 50% of tax dues before 31.12.2013 as prescribed under the scheme. Though the respondent declared amount of service tax dues as Rs. 4,64,663/-, the correct tax dues was only 3,85,064/-. An amount of Rs. 79,599/- which was paid by the respondent in 2009 prior to introduction of the scheme was wrongly included in the total tax dues. The designated authority therefore took the view that respondent has committed default of paying 50% of the declared tax dues. Therefore, the declaration filed by the respondent was rejected by designated authority by issuing a communication to this effect directing the respondent to discharge tax dues along with interest and penalty.

2. Aggrieved with rejection of VCES declaration, the respondent filed appeal before the Commissioner (Appeals). On scrutiny of records, the first appellate authority observed that though the respondent herein had erroneously included Rs. 79,599/- in declaring the total tax dues, the amount of Rs. 2,13,752/- which was deposited by the respondent on 26.12.2013 was sufficient to comply with condition of deposit of 50% of :he declared tax dues. The appeal filed by the respondent was thus allowed directing the designated authority to issue an order accepting the declaration of tax dues under VCES, 2013 scheme and allowed immunity from the interest and penalty on declared tax dues deposited under the scheme. The present appeal is filed challenging the above order of Commissioner (Appeals) on two grounds: (1) VCES, 2013 does not have any statutory provision for filing appeal against the order passed rejecting the declaration and (2) that the designated amount has not passed any such order and has only issued communication rejecting the declaration. That as there is no order of rejection, the appeal filed by the respondent was not maintainable. The Commissioner (Appeals) ought to have dismissed the appeal. It was also argued that if aggrieved by the rejection of declaration the only remedy available to the respondent is to file a writ petition before the High Court.

3. Learned AR Shri G.R. Singh referred to the Circular No.170/5/2013-ST dated 8.8.2013 pointing out the clarification issued by the Board regarding the appeal mechanism in the VCES Scheme. He stated that scheme does not have statutory provisions for filing appeal against the order of rejection of declaration as stated in the clarification.

4. On benalf of the respondent, it was submitted that though total tax dues was erroneously declared as Rs. 4,64,663/-, the respondent had deposited Rs. 2,03,752/- on 26.12.2013 which was 50% of the actual tax dues of tax dues as after deducting Rs. 79,599/- the total dues was reduce to Rs. 3,85,064/-. Therefore the deposit of Rs. 2,13,752/- made by the appellant was sufficient to discharge the obligation of deposit of 50% of declared tax dues (Rs. 3,85,064/-).

5. Heard both sides.

6. The main contention raised by the Revenue is that there is no provision in the Scheme to file appeal against the rejection of declaration by the designated authority. I do not find any merit in this contention. The Scheme being introduced under the Finance Act, 2013 cannot have an independent existence apart from the Act. Therefore all the provisions of the Act except to the extent specifically excluded would be applicable to the proceeding under the scheme. The second contention is that the designated authority has not issued any order rejecting the declaration, but has only issued a communication informing rejection of the declaration. As there is no order of rejection, the appeal is not maintainable. On scrutiny of records, it is seen that the designated authority has communicated to the respondent that the declaration made by them under VCES scheme is rejected and has also directed to discharge tax dues along with interest and penalty. It is evident from this communication that the adjudication on the application filed by the respondent under the scheme has attained finality. Though it is not in the form of an order, the gist of the communication dated nil March, 2014 conveys the final decision made by the designated authority upon the application filed by the respondent under the Scheme. It is for the designated authority to decide whether the show-cause notice has to be issued or not. So also it is within the control of the designated authority to decide whether the decision arrived has to be in the form of an order passed or in the form of letter. In the present case, the designated authority has unilaterally chosen to waive the issuance of show-cause notice and informed his decision of rejection of declaration in the form of a letter issued to the respondent. This is beyond the control of the respondent. The remedy by way of filing of an appeal cannot be taken away from the respondent merely on the failure of the designated authority to issue show-cause notice or pass an order in proper format. Further the argument of the Revenue that the only remedy available is to file writ petition does not make any sense.

7. Shri Akhil Gupta, Chartered Accountant fortified his argument relying upon the decision of the Hon’ble Madras High Court in Narasimha Mills (P.) Ltd. v. CCE [2015] 59 taxmann.com 219. The Hon’ble Madras High Court has observed as under:

“18. Further, 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 (17 of 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 part 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, I am of the view that the order, dated 15.11.2013 passed by the Assistant Commissioner of Central Excise, the second respondent herein is appealable undr Section 85 of the Act, 1994.”

8. The issue under consideration is squarely covered by the proposition laid in the above judgment and is applicable to the present case. Applying the same and from the discussions made above, I do not find any merit in the appeal filed by the Revenue.

9. In the result, the appeal is dismissed. The Cross objections filed by the respondent is also dismissed.

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