By TIOL News Service

NEW DELHI, JUNE 21, 2016: IN the matter of ST VCES, 2013, the CBEC had issued the following clarification in its Circular   170/5/2013-ST dated 8th August, 2013 which reads -

This portion of the Circular was put to test in a Civil Writ Petition before the Punjab & Haryana High Court.

And the High Court in its order dated 09/12/2013 held -

"The impugned order, in our considered opinion, is appealable, under Section 86 of the Indian Finance Act, 1994, particularly as the scheme under which the petitioner has applied, is part and parcel of the aforesaid Finance Act, by virtue of the Indian Finance Act, 2013.

We are unable to accept correctness of instructions issued by the Central Board of Excise and Customs, for the simple reason that after incorporation of the Service Tax Voluntary Compliance Encouragement Scheme into the Finance Act, all other provisions of the Act except to the extent specifically excluded, apply to proceedings under the scheme. The impugned order passed by the Deputy Commissioner of Central Excise and Service Tax would necessarily be appealable under Section 86 of the Indian Finance Act, 1994…"

The Writ Petition was allowed to be withdrawn with the liberty to file an appeal.We reported this order as - 2013-TIOL-1016-HC-P&H-ST.

The appeal filed by the petitioner appellant was allowed by the Commissioner (Appeals) who vide o-in-a dated 23.12.2013  ordered for acceptance of the declaration of the petitioner.

In the meantime, the petitioner paid the service tax for the period from 1.7.2010 to 31.12.2012and sought certificate of discharge from respondent vide letter dated 26.12.2014 and also attached copies of the challans for payment of service tax aggregating to Rs. 10,39,10,421/-. The Respondent, after verification,informed that that a further sum of Rs. 26,000/- was to be paid and which the petitioner did vide letter dated 29.12.2014. However, discharge certificate was not issued by the respondent.

Interestingly, against the earlier High Court order dated 09/12/2013 - 2013-TIOL-1016-HC-P&H-ST, the Department had filed a Civil Appeal and this was decided by the Supreme Court by passing the following order on 24/03/2015 [See 2015-TIOL-39-SC-ST] -

"This appeal was entertained on the limited question as to whether an appeal under Section 86 of the Finance Act, 1994 against the order of rejection of declaration under VCES, 2013 filed by the assessee is maintainable. When the notice was issued, the Court was under the impression that the appeal filed by the respondent-assessee was pending. In the counter affidavit filed by the respondent, it is brought to the notice of this Court that the appeal had already been decided on 23.12.2013 and that the order had already been accepted and implemented by the Revenue. The Revenue did not take up the matter further before the Tribunal.

In the above circumstances, we do not think it necessary to go into that issue in the case of respondent herein, since in the case of the respondent, the issue has become academic. We hence dispose of this appeal leaving the question of law regarding the maintainability of an appeal under Section 86 of the Finance Act, 1994 against the order of rejection of declaration under the VCES , 2013, open."

Incidentally, summons dated 31.7.2015, 10.8.2015 and 12.10.2015 were issued by the department asking the petitioner to furnish all the records and documents which, incidentally, had already been furnished in support of the declaration under the VCES.

All this information seeking and statement recording culminated in SCN dated 21.10.2015 for recovery of service tax amounting to Rs. 16,53,38,730/- and a sum of Rs. 10,39,10,421/- already deposited by the appellant against their liability was sought to be appropriated along with interest.

Against this SCN, the Petitioner moved the High Court and the following order dated 02/12/2015 - 2015-TIOL-2844-HC-P&H-ST was passed -

"4. After hearing learned counsel for the petitioner, the present writ petition is disposed of by directing respondent No.1 to take a decision on the letter dated 26.12.2014 (Annexure P-15), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of one month from the date of receipt of a certified copy of this order.

As regards, challenge to the show cause notice, the petitioner shall file a detailed and comprehensive representation.

In case any such representation is filed by the petitioner, the same shall be decided by the competent authority expeditiously in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner."

The petition was disposed of.

It is pertinent to note that against the apex court decision dated 24/03/2015 [See 2015-TIOL-39-SC-ST] the Department had filed a Review petition on the ground that Revenue had in fact filed an appeal before the CESTAT against the decision dated 23.12.2013 passed by the Commissioner (Appeal) on 27.03.2014 and the said appeal is pending.

The Supreme Court heard the matter recently and passed the following order -

Civil Appeal No.3135/2015 was disposed of by Judgment dated 24.03.2015. The disposal was on the basis of the statement in the counter affidavit that the appeal filed by the assessee had already been decided on 23.12.2013 and it had been accepted and implemented by the Revenue. It was also stated in the Judgment that the Revenue did not take up the matter further before the Tribunal. It appears that both sides were not conversant with the factual position.

Since the Civil Appeal No. 3135/2015 has been disposed on the basis of incorrect facts, the Review Petition is only to be allowed. Ordered accordingly.

Judgment dated 24.03.2015 in Civil Appeal No. 3135/2015 is recalled.

The matter is posted for hearing before the appropriate Bench.

(See 2016-TIOL-88-SC-ST)