fiogf49gjkf0d
Benefit of VCES cannot be denied merely because certain payments were made under wrong accounting code as interest and penalty instead of respective service tax code, if rectification is sought from the department and the same is given effect to.
Facts
A departmental audit was conducted for the period 2008-09 to 2011-12 after the introduction of Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) i.e. after 13.05.2013 and in terms of audit para, part payment of service tax liability along with interest and penalties was made. The audit party did not inform the assessee about the VCES and hence only after making such part payments, a declaration was filed by the assesse declaring tax dues in respect of service tax liability computed under the audit.
The authorities were requested to adjust the part payments made as interest and penalty against service tax dues declared under the scheme. Although assessee paid amount equivalent to around 75% of the total tax dues before 31.12.2013, out of the said amount, 30% amount was paid towards interest and penalty which was adjusted by department against service tax dues after 31.12.2013 i.e. on 30.05.2014 on the basis of application of the assessee for correction of accounting codes for substituting the amounts paid as interest and penalty with service tax code.
The designated authority, refused to issue acknowledgment of discharge under form VCES-3 on the ground that the condition prescribed u/s. 107(4) of the Finance Act, 2013 with respect to full payment of tax dues declared under VCES by 31.12.2014 was not fulfilled and also held that erstwhile payment towards interest and penalty cannot be adjusted as they were liable to be recovered u/s. 87 of the Finance Act, 1994 without any immunity.
Held
The High Court observed that, it is not in dispute that amount equivalent to tax dues declared under the scheme was paid before June 2014. It was held that the respondent cannot be permitted to deny the benefit of the scheme by taking shelter of a hyper-technical plea. When a beneficial scheme is introduced the respondent in all fairness should inform about the availability and benefit of the scheme. Accordingly, the payment made was held as made on fulfillment of conditions of the scheme.
