Custom, Excise & Service Tax Tribunal
C.S.T., Service Tax -Ahmedabad vs M/S Sorath Builders on 28 March, 2018
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.ST/11290/2017-SM
[Arising out of OIA No. AHM-SVTAX-000-APP-230-16-17 dated 20.02.2012 passed by C.S.T. Ahmedabad]
C.S.T., Service Tax -Ahmedabad Appellant
Vs
M/s Sorath Builders Respondent
Represented by:
For Appellant: Sh. A. Mishra (A.R.) For Respondent: Sh. Kunal Desai (Advocate) CORAM:
HONBLE DR. D.M. MISRA, MEMBER (JUDICIAL) Date of Hearing/decision:28.03.2018 Final Order No. A/ 10590 /2018 Per: Dr. D.M. Misra:
Heard both the sides.
2. This is an appeal filed by the Revenue against order-in-appeal No. AHM-SVTAX-000-APP-230-16-17 passed by the Commissioner of Service Tax (Appeals). The short issue involved in the present appeal is whether delay in issuing SCN by the authorities beyond 30 days from the date of filing the VCES application pursuant to Finance Act, 2013 could be rejected as time bar.
3. Ld. AR for the Revenue has submitted that on the basis of the Circular/ clarification of the Board, the Ld. Commissioner (Appeals) observed that since from the date of filing the declaration, notice was issued after 30 days the notice is bad in law and the VCES application should automatically be accepted. Ld. AR for the Revenue further submits that in view of the Provisions in Section 111 of the Finance Act, 2013, a period of one year has been prescribed for issuing notice, in the event the Department proposes to reject the declaration. Therefore, the provisions of the Finance Act would prevail over the Circular in support he has referred to the judgment of this Tribunal in the case of Videocon International Ltd. Vs CCE Aurangabad 2004 (167) ELT 33 (Tri. Mum.) and the Honble Supreme Court in CCE Service Tax vs Ultratech Cement Ltd. 2018-TIOL-42-SC-Cx.
4. Ld. Chartered Accountant for the Respondent submits that in the Circular, Board has categorically clarified that in the event the department proposes to reject the application under VCES Scheme, it should issue notice within 30 days from the date of filing the declaration stating the reasons for proposed action of rejection of the declaration. Since in the present case it has not been complied, therefore, the Ld. Commissioner (Appeals) has rightly allowed the appeal and decided the issue in their favour.
5. Heard both the sides and perused the records.
6. I find that Section 111 of the Finance Act, 2013 relied upon by the Revenue reads as follows:
Failure to make true declaration.
(1) Where the Commissioner of Central Excise has reasons to believe that the declaration made by a declarant under this Scheme was substantially false, he may, for reasons to be recorded in writing, serve notice on the declarant in respect of such declaration requiring him to show cause why he should not pay the tax dues not paid or short-paid. (2) No action shall be taken under sub-section (1) after the expiry of one year from the date of declaration.
(3) The show cause notice issued under sub-section (1) shall be deemed to have been issued under section 73, or as the case may be, under section 73A of the Chapter and the provisions of the Chapter shall accordingly apply.
The Circular issued by the Board dated 08.08.2013 at Serial No. 12 reads as follows:
12Whether declarant will be given an opportunity to be heard and explain his cases before the rejection of a declaration under section 106(2) by the designated authority?
Yes. In terms of section 106 (2) of the Finance Act, 2013, the designated authority shall, by an order, and for reasons to be recorded in writing, reject a declaration if any inquiry/investigation or audit was pending against the declarant as on the cutoff date, i.e., 1.3.2013. An order under this section shall be passed following the principles of natural justice.
To allay any apprehension of undue delays and uncertainty, it is clarified that the designated authority, if he has reasons to believe that the declaration is covered by section 106 (2), shall give a notice of intention to reject the declaration within 30 days of the date of filing of the declaration stating the reasons for the intention to reject the declaration. For declarations already filed, the said period of 30 days would apply from the date of this circular.
The declarant shall be given an opportunity to be heard before any order is passed by the designated authority.
7. A harmonious reading of the Finance Act, 2013 and the Circular makes it clear that the Board has issued the clarification to expedite the process of VCES application making it necessary to issue notice within 30 days, if it is proposed/ intended to reject the same. However, the said Circular cannot disturb the upper limit of one year fixed by the legislation as prescribed under Section 111 of the Finance Act, 2013. Recently, Honble Supreme Court in Ultratech Cement Ltds case (supra) observed that in a case there is a conflict between the Circular and the Rule, the Rule should prevail. In the result, the impugned order is set aside and the appeal is remanded to the Ld. Commissioner (Appeals) to decide the case on merit afresh. Revenues appeal is allowed by way of remand.
(Dictated and pronounced in the open court) (Dr. D.M. Misra) Member (Judicial) Neha 2 | Page ST/11290/2017-SM