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Judgment
CM 4142/2014
Exemption is allowed subject to all just exceptions.
The application is disposed of.
W.P.(C) 1986/2014 and CM 4141/2014
The petitioner made an application u/s 106 of the Finance Act, 1994 as amended in 2013. In terms of the said provision, which was part of the scheme known as the ''Service Tax Voluntary Compliance Encouragement Scheme, 2013'' a declarant [defined u/s 105(1)(b)] was given an opportunity to disclose service tax dues. Section 106 and 107 which are material for the purpose of the present case read as follows :
Person who may make declaration of tax dues.
(1) Any person may declare his tax dues in respect of which no notice or an order of determination u/s 72 or section 73 or section 73A of the Chapter has been issued or made before the 1st day of March, 2013:
Provided that any person who has furnished return u/s 70 of the Chapter and disclosed his true liability, but has not paid the disclosed amount of service tax or any part thereof, shall not be eligible to make declaration for the period covered by the said return.
Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period.
(2) Where a declaration has been made by a person against whom,-
(a) an inquiry or investigation in respect of a service tax not levied or not paid or short-loved or short-paid has been initiated by way of-
( i ) search of premises u/s 82 of the Chapter; or
(ii) issuance of summons u/s 14 of the Central Excise Act, 1944, as made applicable to the Chapter u/s 83 thereof; or
(iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or
(b) an audit has been initiated, and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration.
Procedure for making declaration and payment of tax dues.
(1) Subject to the provisions of this Scheme, a person may make a declaration to the designated authority on or before the 31st day of December, 2013 in such form and in such manner as may be prescribed.
(2) The designated authority shall acknowledge the declaration in such form and in such manner as may be prescribed.
(3) The declarant shall, on or before the 31st day of December, 2013, pay not less than fifty per cent of the tax dues so declared under sub- section (1) and submit proof of such payment to the designated authority.
(4) The tax dues or part thereof remaining to be paid after the payment made under subsection (3) shall be paid by the declarant on or before the 30th day of June, 2014:
Provided that where the declarant fails to pay said tax dues or part thereof on or before the said date, he shall pay the same on or before the 31st day of December, 2014 along with interest thereon, at such rate as is fixed u/s 75 or, as the case may be, section 73B of the Chapter for the period of delay starting from the 1st day of July, 2014.
(5) Notwithstanding anything contained in sub-section (3) and sub-section (4), any service tax which becomes due or payable by the declarant for the month of January, 2013 and subsequent months shall be paid by him in accordance with the provisions of the Chapter and accordingly, interest for delay in payment thereof, shall also be payable under the Chapter.
(6) The declarant shall furnish to the designated authority details of payment made from time to time under this Scheme along with a copy of acknowledgement issued to him under subsection (2).
(7) On furnishing the details of full payment of declared tax dues and the interest, if any, payable under the proviso to sub-section (4), the designated authority shall issue an acknowledgement of discharge of such dues to the declarant in such form and in such manner as may be prescribed.
It is contended that the petitioner in the declaration filed before the Service Tax Authorities sought to declare the amount of Rs.3.87 crores. In terms of its understanding, it claimed credit for the sum of Rs.81,35,729 /- deposited by it earlier, i.e., prior to March, 2013. It also sought to seek credit for the sum of Rs.1,18,00,000 /- paid between 18th March, 2013 and 10th July, 2013, in compliance of section 107(3). The Service Tax Authorities however refused to accept the declaration, taking the position that the credit claimed in respect of the earlier sum paid up to 18.3.2013 was based upon a wrong understanding of the provisions relating to the scheme. The tax authorities also held, consequently, that in the absence of 50% deposit u/s 107(3) the application could not be entertained and proceeded with.
It is contended by the petitioner that the omission to provide an express provision for extension of time for deposit of the initial 50% cannot be construed to its prejudice given the objectives of the encouragement scheme. It was contended that pre-deposit or for that matter timely pre-deposit is not central for the purpose of the scheme as is evident from section 107(4) which in fact extends the time for deposit of balance 50%, enabling instalments to be paid first by 30.06.2014 and thereafter by 31st December, 2014. It was therefore contended that the mistake of including Rs.81,35,729 /- as part of the declaration should be permitted to be rectified and that the declaration should be so read or construed as having been amended to exclude a reference to that amount.
The object of the "Service Tax Voluntary Compliance Encouragement Scheme, 2013" appears to the net escaped tax liability by service providers who are otherwise either in default or have not been assessed. It was to afford them a window of opportunity to voluntarily disclose their liability. In a sense it is similar to a permanent mechanism as the Settlement Commission or a voluntary disclosure scheme which the Central Government put in place in different tax regimes. Self contained nature of the scheme is evident from the definitions as well as the regime it dictates for a declarant who has offered to fully disclose the tax dues which are payable according to him and also make the necessary deposit as a pre-deposit for extension of the benefit which is immunity from the penalty, interest and other proceedings given u/s 108. It would be worth noticing that the scheme itself was brought into force w.e.f. May, 2013. Assessee''s and service providers liable to service tax therefore had adequate time to weigh the choices and make necessary declaration under sections 106 and 107. The fact that the declaration regime required payment of 50% of the tax dues u/s 107, and at the same time allowed flexibility for payment of the balance of 50% in this Court''s opinion would not be fatal to the working of the scheme. In fact the right of the assessee to claim the benefit of the scheme is dependent upon its depositing the initial 50%. The assessee''s income from rendering of services was not brought to tax for some reason or the other, due to omission, either wilful or inadvertent; such assesses were given more than enough time to consider whether they would make a disclosure under the Scheme. Once such disclosure was made, the applicant or declarant was entitled to be considered only upon deposit of 50% by 31.12.2013. The consideration prayed for by the petitioner that such initial deposit cannot be considered as mandatory cannot be granted, given the fact that the scheme is a package and does not permit any such division. The only relief available is by way of power to remove difficulties conferred upon the Central Government. We also notice that the authorities have not been given any discretion in the matter of grant of extension of time to make initial pre-deposit of 50% of the declared tax amount. In fact, the consequences are spelt out for failure to pay the tax dues u/s 110. In these circumstances the claim in the petition for a direction to extend the period or alternatively for deleting the sum of Rs.81 lakhs from the declaration already filed cannot be granted.
This Court clarifies that no opinion has been expressed on any other provision of the Act, in the event of issue of show cause notice or initiation of any other proceedings thereof.
The petition is accordingly dismissed in the above terms.
Order dasti.