2014 (34) STR 165 (Del.) Frankfinn Aviation Services P. Ltd. vs. Asst. Commr., Designated Authority, VCES, Service Tax

Facts:
Appellant provided vocational training for Air Hostess/ stewards, hospitality and management sector and furnished declaration under the aforesaid scheme for the period from April – December, 2012 for availing immunity from prosecution and penalty. As per the condition of the scheme, no notice or order of determination should have been received previously by a person. Appellant filed an appeal in Tribunal for the notice/order concerning the past six year period between September – February, 2012. The designated authority rejected its declaration on the premise of existence of dispute in the previous periods before the CESTAT .

It was contended that the criteria for debarring the declaration provided in proviso to section 106 had limited application. In that, the ‘issue’ covered should be identical to the subject matter of declaration. It is contended that the subject matter of controversy pending before the Tribunal pertained to its eligibility to avail the exemption notification dated 10-09-2004 meant for vocational training institutes and entirely different from the issue covered by the declaration. More so, CBEC Notification issued dated 27- 02-2010 has laid down the criterion of vocational training institutes covered under service tax net and thereby petitioner was paying service tax for the period till 31-03-2012 but later on could not deposit the tax because of some unavoidable reasons. Petitioner prayed that recourse to the Scheme was available.

Held:
The Hon’ble High Court observed that, as per the principles of interpretation, a proviso prescribes an exception from the operation of the main provision. Thus, “any issue” mentioned must mean that, the issue for service tax liability or quantum of liability itself for a given period must be pending before any tax authority or Tribunal or issue should have been determined. In case of distinct period other than above wherein, the subject matter of declaration is not pending or determined earlier will not be covered by the above exception.

Allowing the petition, it was held that, pendency of distinct issue of Assessee’s liability for the past period could not bar the remedy as per the Scheme.