By TIOL News Service

ERNAKULAM, JUNE 10, 2016: THE petitioner was informed that on account of delayed payment of the amount under the ST Voluntary Compliance Encouragement Scheme, 2013, the petitioner would be denied the benefit of the said Scheme, and recovery of service tax dues for the period April 2008 to March 2015 would be effected against the petitioner.

In the writ petition, the petitioner submitted that as against the tax dues of Rs.8,68,821/- declared under VCES, 2013, they had paid 50% of the tax dues amounting to Rs.4,34,413/- vide Challans dated 30.12.2013, and the balance amount of 50% together with interest thereon was paid by them only on 06.01.2015; that there was a marginal delay of six days from the date fixed under the Scheme and for this, they should not be denied the substantive benefit offered to assessees under the VCES Scheme, 2013. Relying on the decisions of the Supreme Court rendered in the context of interpretation of exemption provisions under a taxing statute, that while the general rule is that an exemption provision under a taxing statute should be strictly construed against an assessee and in favour of the revenue, the strict interpretation would apply only to ascertain whether the petitioner is entitled to the benefit of the exemption. And once the petitioner is found entitled to the benefit of the exemption, then the exemption notification has to be interpreted widely so as to try and retain the petitioner within the benefit of the exemption that was contemplated under the notification.

The counsel for the respondent Revenue vehemently opposed the grant of any indulgence to the petitioner, on the ground that the VCES, 2013 is in the nature of an Amnesty Scheme and the provisions have to be strictly construed in favour of the revenue and against the assessee.

At the outset, the High Court observed that the decisions relied upon by counsel for the petitioner deal with interpretation of exemption notifications and cannot strictly be applied to the facts of the instant case.

The High Court further observed -

++ The VCES Scheme, 2013, is in the nature of an Amnesty Scheme and, therefore, its provisions have to be strictly interpreted, and the time limit specified in the Scheme for the payment of amounts together with interest have to be strictly adhered to.

++ The scheme partakes of the nature of a settlement between the assessee and the department and from the terms of the settlement neither party can be permitted to resile.

++ To allow the petitioner to effect payments belatedly would tantamount to altering the terms of the settlement and that cannot be done by this Court in exercise of its powers under Art. 226 of the Constitution of India.

++ In the instant case, although the delay occasioned by the petitioner is only of six days from the cut off date mentioned under the Scheme, it has to be borne in mind that the actual amount to be paid under the Scheme was to be paid on or before June 2014 and the extension of time from June 2014 to 31stDecember, 2014, itself was by way of an exception to the main provisions so as to enable a defaulter to pay the amounts that fell due by June 2014, on or before 31.12.2014, by paying the same together with interest thereon.

++ In the instant case, the petitioner did not effect payment of the amounts even before the extended date of 31.12.2014. Under the said circumstances, I am of the view that the petitioner cannot claim the benefit of the VCES Scheme, 2013.

The writ petition was dismissed.

In passing:

++ Ramilaben Bharatbhai Patel vs. UOI  - 2014-TIOL-678-HC-AHM-ST

ST VCES, 2013 - shortfall in depositing 50% declared tax dues by 31 st December, 2013 - declaration rightly rejected by designated authority - There is no power for waiving or relaxing the condition of depositing 50% tax dues flowing from section 107 - It would not be possible for the High Court to exercise writ jurisdiction to direct the authority, in plain terms, which the statutory provision does not permit - Petition dismissed: High Court

++ Global Networking Resources - 2016-TIOL-1344-CESTAT-MUM

ST - VCES, 2013 - A 'small' portion of the 50% amount of tax dues not paid by 31/12/2013 - Time limit prescribed under the scheme cannot be extended in absence of any provision for condoning the delay - declaration rightly rejected - Appeal dismissed: CESTAT

(See 2016-TIOL-1121-HC-KERALA -ST)