Gujarat High Court
Ramilaben Bharatbhai Patel vs Union Of India & 2 on 1 May, 2014
Author: Akil Kureshi
Bench: Akil Kureshi, Sonia Gokani
C/SCA/6222/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 6222 of 2014
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RAMILABEN BHARATBHAI PATEL....Petitioner(s)
Versus
UNION OF INDIA & 2....Respondent(s)
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Appearance:
MR JIGAR SHAH WITH MR.ANAND NAINAWATI, ADVOCATE for the
Petitioner(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL
KURESHI
and
HONOURABLE MS JUSTICE SONIA
GOKANI
Date : 01/05/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The petitioner has challenged a communication dated March 19, 2014 issued by the respondent No.3Assistant Commissioner of Service Tax.
2. Brief facts are as under :
2.1 The legislature formulated service tax voluntary compliance encouragement scheme, 2013 (hereinafter referred to as 'the Scheme') by way of Chapter VI of the Finance Act, 2013, Page 1 of 9 C/SCA/6222/2014 ORDER which contains sections 104 to 114. Broadly, the scheme enables a person to make declaration of his tax dues and subject to fulfilling the conditions in the said scheme, such declarant would get immunity from interest and penalties of previously not having paid the taxes.
Section 106 pertains to a person who may make declaration. Procedure for making declaration and payment of tax dues is provided in section
107. Upon such declaration being accepted as per section 108, the declarant would get immunity from penalty, interest and other proceedings. Subsection (1) of section 107 enables a person to make a declaration to the designated authority before December 31, 2013 in the prescribed format. Under subsection (3) of section 107, the declarant has to pay not less than 50% of the tax dues so declared under subsection (1) of section 107 before December 31, 2013. As per subsection (4) of section 107, the remaining part of the tax dues would have to be paid up by June 30, 2014. Proviso to Page 2 of 9 C/SCA/6222/2014 ORDER subsection (4) of section 107 provides as under :
"107(4) .. .. ..
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 under section 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."
2.2 Under subsection (7) of section 107, on furnishing the details of full payment of declared tax dues and the interest, if any, payable under the proviso to subsection (4), the designated authority shall issue an acknowledgement of discharge of such dues to the declarant in the prescribed format. 2.3 Section 110 provides that where the declarant fails to pay the tax dues, either fully or in part, as declared by him, such dues Page 3 of 9 C/SCA/6222/2014 ORDER along with interest thereon shall be recovered under the provisions of section 87. 2.4 The petitioner made a declaration under section 107 of the tax dues, declaring an unpaid tax dues of Rs.16,42,936/, out of such tax dues the petitioner deposited a sum of Rs.8,01,120/ before December 31, 2013. Admittedly, thus, towards the first instalment there was a shortfall of Rs.20,148/. On the premise that 50% of the tax dues were not deposited before December 31, 2013, the respondent No.3 under the impugned communication dated March 19, 2014, conveyed to the petitioner as under :
"Subject : Rejection of your VCES Declaration matter reg.
You are hereby informed that your VCES declaration of Rs.16,42,936/ dated 26.12.2013 has been rejected by the Commissioner, Service Tax, Ahmedabad due to following reasons :
(i) Less payment then the 50% of tax dues of the total declared tax dues.Page 4 of 9 C/SCA/6222/2014 ORDER
You are hereby informed that the declared amount under VCES is recoverable under Section 87 of Finance Act, 1994 immediately. Therefore, you are requested to pay up the said amount immediately alongwith interest and also submit following documents for 200809 onwards for necessary verification by the undersigned within one week of receipt of this letter :
(i) Balance Sheet
(ii) P/L Account
(iii) ST3 Returns, if filed
(iv) Bank Statements."
3. It is this communication that the petitioner has challenged in this petition. Thus, admitted facts are that there was a shortfall in depositing 50% of the tax dues by the cut off date of December 31, 2013. As we have noticed that the scheme requires a declarant to deposit 50% of the tax dues latest by December 31, 2013, the remaining 50% would have to be paid latest by June 30, 2014. The proviso to subsection (4) of section 107 gives some flexibility for the purpose of depositing second instalment. Additional six months are granted, but to the extent of delay beyond such period, the declarant would have to Page 5 of 9 C/SCA/6222/2014 ORDER bear interest as well. Indisputably, the proviso applies only to subsection (4) and not sub section (3). There are several indications in the proviso itself, which makes it inapplicable to subsection (3).
4. The scheme, thus, requires a declarant to deposit the tax dues of 50% by a certain date. It is only after the full deposit that under subsection (1) of section 107, the declaration would be accepted and the designated authority would acknowledge the discharge of dues of the declarant in the prescribed format. Under the circumstances, the petitioner not having fulfilled the essential requirement of the scheme, the authority committed no error in rejecting such declaration.
5. The learned counsel for the petitioner, however, raised two fold contentions. He firstly contended that the shortfall was due to a bona fide calculation error. The amount involved was very small. He secondly contended that under section 110, the tax shortpaid could be recovered with Page 6 of 9 C/SCA/6222/2014 ORDER interest, but the declaration itself cannot be rejected.
6. To our mind, neither of the two contentions can be accepted. The scheme makes no difference between tax dues which are shortpaid due to bona fide error and one which flows from deliberate inaction. 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 this Court to exercise writ jurisdiction to direct the authority, in plain terms, which the statutory provision does not permit.
7. Coming to the second contention, the scheme envisages depositing tax dues in two stages. Only after the taxes are fully deposited stagewise that the declaration under section 107 would be accepted. Section 110 only pertains to recovery of the taxes declared, but not paid. This provision has no bearing on the invalidity of declaration when the declarant fails to deposit the taxes as provided in subsections (3) and (4) Page 7 of 9 C/SCA/6222/2014 ORDER of section 107. If we interpret section 110, as urged by the learned counsel for the petitioner, that it encompasses both the cases of delay in depositing the taxes at the first stage of sub section (3) of section 107 and second stage of subsection (4) of section 107, the proviso to subsection (4) would be rendered wholly redundant. If as suggested, shortfall in the taxes could be accepted after charging interest under section 110, there was no need to make special proviso for extending time for depositing the remaining of the taxes under subsection (4) of section 107. Further, section 110 pertains to compulsory recovery of taxes with interest. Sub sections (3) and (4) of section 107 refer to voluntary tax deposit by a declarant in terms of the scheme. Both these operate in separate fields.
8. In the result, the petition is dismissed.
(AKIL KURESHI, J.) Page 8 of 9 C/SCA/6222/2014 ORDER (MS SONIA GOKANI, J.) Aakar Page 9 of 9