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High Court refused to interfere with adjudication proceeding which covered the period for which application was filed by the Petitioner under VCES. Held that, Petitioner can take all the arguments and contentions possible in law before adjudicating authority, including inviting his attention to relevant paragraphs in the said scheme.
Facts:
The petitioner filed declaration under Service Tax Voluntary Compliance Scheme (VCES) for the period July 2012 to December 2012. While the due date for filing of application was 31/12/2013, in August 2013, department issued order for attaching bank accounts of the petitioner and recovered certain amount from the petitioner under recovery proceedings u/s. 87(b). The petitioner filed a letter with the department for adjusting the amount so recovered against 50% of the amount declared under VCES. However no certificate of discharge (VCES-3) was issued to the petitioner. Subsequently, show cause notice was issued by the department in June 2014 for the period July 2012 to August 2013. The petitioner expressed apprehension in the course of hearing before the Court that since the proceedings under VCES are not closed by Designated Authority under the Scheme by issuing VCES-3 in terms of section 107(7) of the Scheme, the show cause notice which is issued and required to be adjudicated proceeds on a wrong and incorrect assumption and that adjudication (including for the period covered under VCES), will take place before a distinct adjudicating officer, who is not a designated authority under the Scheme. The petitioner also submitted that in absence of such a declaration as required under the scheme, the adjudicating authority will proceed to recover not only the duty amount but also interest and penalty in respect of period covered under the Scheme. The petitioner also clarified that the object of writ was not to interfere with the ongoing proceeding but prayed for issuing direction to the Designated Authority for issuing necessary VCES-3 in terms of section 107(7) of the Scheme.
Held:
The High Court observed that the basis of determination of service tax demand and the period and the liability declared by the petitioner under the VCES are clearly brought out in the show cause notice. Therefore, the Court disposed of the application expressing a view that the submissions made by the petitioner before the Court can also be made before the adjudicating authority in the course of adjudication and if VCES-3 has not been issued, it would be open for the petitioner to urge that failure on the part of the authority to issue such a declaration should not visit him with any tax demand including of interest and penalty. It further held that merely because the show cause notice is going to be adjudicated by a distinct authority does not mean that the petitioner is prevented from canvassing appropriate pleas and therefore, the petitioner can always raise such pleas as are permissible in law including by inviting the attention of the authority to the Scheme and its clauses or paragraphs and sub-paragraphs.
[Note: Readers may note that the issue whether the period covered under VCES can also be adjudicated by any authority other than Designated Authority under different show cause proceedings is left open by the Hon. Court.]
