The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the benefit of Voluntary Compliance Encouragement Scheme, 2013 (VCES) not to be denied when SCN issued is time barred.
The appellant, M/s JMD Limited filed the VCES declaration, declaring their tax dues as Rs. 1,17,98,160/-, on account of Rental Services etc and Services under reverse charge. The 50% of the declared tax was deposited by the appellant before 31.12.2013 and the remaining was deposited within the prescribed period.
The Designated Authority issued the show cause notice dated 24.01.2014 to the effect that an enquiry against the company was initiated by Anti Evasion Branch of the Commissionerate and the same is pending as on 01.03.2013 and therefore it appears that under Section 106 of the Finance Act, 2013 they are not eligible to file the declaration under VCES.
The main contention of the appellant was that the letter dated 18.02.2013 whereby he has been asked to supply the documents/ information is only of general nature and does not refer to any specific subject with which the enquiry can be said to have been initiated. On the other aspect of the show cause notice being time barred, he submitted that the show cause notice was dated 24.01.2014 but the same was received by him as per the postal record on 03.02.2014, which is beyond the period of thirty days.
The Authorised Representative for the Revenue has relied on the findings of the impugned order as well as the Order-in-original passed by the Adjudicating Authority and according to him when the appellant was asked to supply the documents / data/ information, it was clearly initiation of an investigation, which was admittedly before 01.03.2014 and therefore the case squarely falls under Section 106 (2) of the Act and the appellant is not entitled to the benefit of VCES.
A Two-Member Bench comprising Binu Tamta, Judicial Member and PV Subba Rao, Technical Member observed that “The very purpose of introducing the scheme is to motivate the registered assessee who had stopped filing the returns to file returns and pay the taxes. The underlying object is to reduce unnecessary litigation, which is evident from the clarifications made in the Circulars. The VCES Scheme as further clarified in the Circulars needs to be implemented so as to give full play which would not only benefit the assessee but also the revenue.”
“We are of the considered view that the show cause notice in the present case is time barred and cannot be acted upon. Further, the Circular dated 25.11.2013 in unequivocal words has stated that, Commissioner should ensure that the said time limit of giving the notice within 30 days has to be followed scrupulously” the Bench noted.
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