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2014 DIGILAW 188 (UTT)

Uttarakhand Van Vikas Nigam v. Union of India

2014-04-23

ALOK SINGH

body2014
Judgment : 1. All these writ petitions are interconnected involving identical questions of fact and law, therefore, all the writ petitions were taken up together for hearing and are being disposed of by this common judgment with the consent of learned counsel for parties. 2. In all these writ petitions, show cause notices as to why VCES declaration filed by the petitioner (assessee) should not be rejected and immunity from payment of interest and penalty, claimed by the petitioner under VCES scheme, should not be denied as well as order rejecting the VCES – I filed by the petitioners, are impugned in the present writ petitions. 3. For adjudication of all the writ petitions, facts of WPMS No. 891 of 2014 are being taken up for consideration. 4. Brief facts of the present case, inter alia, are that petitioner /Regional Depot of Uttarakhand Van Vikas Nigam is involved in the business of collecting and selling different Forest products and Forest products are being transported for commercial purposes. On 26.07.2011, respondent Department issued notice seeking information from petitioner as to why Service Tax may not be imposed on the petitioner under the head “Transport of Goods by Road Services”. Thereafter, second notice dated 07.09.2011 was issued to the petitioner (Annexure No. 2 to the writ petition), which reads as under: “Kindly refer to this office letter of even C. No. dated 26.07.2011 on the above subject. In this regard, the desired information is still awaited from you, which is causing delay in completion of investigation. It is reiterated that it is gathered that your organization is incurring significant amount under the head freight/transportation charges for transportation of wood, minerals etc. In view of the statutory provisions of ‘Goods Transport Agency’ (copy enclosed), it appears that service tax is leviable on freight charges paid by your organization. In order to further enquire into the matter, it is requested that the following information may be provided to this office at the earliest – 1. The amount of freight/transportation charges incurred by your organization during 2006-07 to 2010-11; 2. Balance sheets (with all schedules and annexure) for the years 2006-07 to 2010-11; 3. Whether your organization is registered with Service Tax & Central Excise department or not. If yes, details of service tax paid under the category ‘transport of goods by road service. The amount of freight/transportation charges incurred by your organization during 2006-07 to 2010-11; 2. Balance sheets (with all schedules and annexure) for the years 2006-07 to 2010-11; 3. Whether your organization is registered with Service Tax & Central Excise department or not. If yes, details of service tax paid under the category ‘transport of goods by road service. Kindly note that the above information is being sought under the provisions of Section 14 of the Central Excise Act, 1944 as made applicable to Service Tax matter by virtue of Section 83 of the Finance Act, 1994.” 5. Thereafter, 3rd Notice was issued on 22.05.2012, which reads as under: “This office is conducting an enquiry regarding payment of Service Tax on under the head Transport of goods by Road services. In this regard, it is requested that the copies of Balance sheets (with all schedules and annexure) for the years 2007-08 to 2011-12, may be provided to this office. If the balance sheet for 2011-12 has not been audited, the un-audited copy of balance sheet may be provided. These documents/information may be supplied within seven days of receipt of this letter. Kindly note that the above information is being sought under the provisions of Section 14 of the Central Excise Act, 1944 as made applicable to Service Tax matter by virtue of section 83 of the Finance Act, 1994.” 6. Meanwhile, Finance Act, 2013 (17 of 2013) came to be enacted on 10.05.2013. Petitioner filed voluntary declaration VCES – I on 22.11.2013. 7. Learned Assistant Commissioner Central Excise, Division Haldwani, issued impugned show cause notice to the petitioner on 28.11.2013 (Annexure No. 12 to the writ petition) stating therein that since petitioner had deposited the tax on 31.03.2013 while VCES – I was filed by the petitioner on 22.11.2013; in fact, the Finance Act 2013 was enacted on 10.05.2013; moreover, investigation / inquiry regarding liability to pay service Tax was pending against the petitioner much prior to the enactment of the Finance Act, 2013 (i.e. on 10.05.2013), therefore, as to why VCES – I filed by the petitioner be not rejected and immunity from payment of interest and penalty under VCES Scheme 2013 be not withdrawn. 8. 8. Petitioner in compliance of show cause notice (Annexure No. 12 to the writ petition) appeared before the Assistant Commissioner, Central Excise and made request to accept VCES – I, however, same was rejected by the Assistant Commissioner, Central Excise vide impugned order (Annexure No. 13 to the writ petition) on the following grounds: (i) inquiry / investigation initiated against the petitioner in the year 2011 was pending. (ii) Petitioner deposited entire service tax on 31.03.2013 in anticipation of the result of the inquiry / investigation pending against the petitioner; (iii) The Finance Act, 2013 was enacted on 10.05.2013 and VCES – I was filed by the petitioner on 22.11.2013, therefore, as per Section 106 of the Finance Act, 2013 petitioner is not entitled for any immunity from payment of interest and penalty. 9. Feeling aggrieved, petitioner has approached this Court by way of filing present writ petitions invoking Article 226 of the Constitution of India. 10. I have heard Mr. P.R. Mullick, learned counsel for the petitioner, Mr. Shobhit Saharia, Senior Standing Counsel with Ms. Vijay Laxmi, Standing Counsel for respondents and have carefully perused the record and all the relevant provisions of the Finance Act, 2013 and the Central Excise Act, 1944. 11. Learned counsel for the petitioner vehemently contends that if roaming inquiry was pending against the assessee prior to enactment of the Finance Act, 2013, then sub-Section 2 of Section 106 of the Finance Act, 2013 should not be pressed in service against the assessee rejecting VCES – I filed by the assessee. He further contends that the Finance Act, 2013 came into existence on 10.05.2013, however, draft thereof was available in view of the statement made by the Finance Minister, therefore, in order to take benefit of the Finance Act, 2013 assessee deposited entire amount, which otherwise would have been levied against the petitioner and after enactment of the Finance Act, 2013, petitioner filed VCES – I on 22.11.2013. 12. 12. Learned counsel for the petitioner further contends that it has not been observed in the impugned order that assessee has not disclosed entire liability of the service tax to be paid or in other words, Revenue is not saying that petitioner had disclosed wrong facts, therefore, rejection of the VCES – I, only on hyper technical ground that inquiry / investigation was pending against the assessee and tax was deposited by the assessee on 31.03.2013 prior to enactment of the Finance Act, 2013 cannot be held to be justified or legal. He further submits that ordinarily, benefit of voluntary disclosure scheme should be extended in favour of the assessee and benefit thereof should not be denied on hyper technical ground. 13. On the other hand, learned Standing Counsel for the respondents vehemently argued that VCES – I submitted by the assessee can be rejected, if inquiry or investigation in respect of service tax was initiated either by way of search of premises under Section 82 of the Chapter; or by issuing summons under Section 14 of the Central Excise; or by requiring the assessee to produce Accounts, documents and other evidence under the Chapter or Rules made thereunder or when an audit has been initiated by the Department prior to 01.03.2013. He further contends that in the present case, undisputedly, first notice was issued by the Department to the assessee way back in the year 2011. Thereafter, second notice was issued on 07.09.2011 asking the petitioner to furnish certain information. Thereafter, vide third notice dated 22.05.2012 (Annexure no. 2 to the writ petition), petitioner was further requested to furnish, audited or unaudited accounts, therefore, VCES – I filed by the assessee was rightly rejected withdrawing the immunity from payment of interest and penalty. 14. Let me now examine the submissions raised by learned counsel for the parties. 15. Thereafter, vide third notice dated 22.05.2012 (Annexure no. 2 to the writ petition), petitioner was further requested to furnish, audited or unaudited accounts, therefore, VCES – I filed by the assessee was rightly rejected withdrawing the immunity from payment of interest and penalty. 14. Let me now examine the submissions raised by learned counsel for the parties. 15. Undisputedly, first notice was issued to the assessee on 26.07.2011 asking the assessee to furnish certain information for the purpose of levying service tax under the head “Transport of Goods by Road Services” and thereafter, second notice was issued on 07.09.2011, which has been reproduced hereinbefore asking the assessee to submit three information sought by the Department and thereafter, third notice was issued on 22.05.2012 asking the assessee to submit audited or unaudited accounts to the Authority for the purpose of passing appropriate order on the question of imposition of service tax under the head “Transport of Goods by Road Services” 16. Undisputedly, all the three notices were issued prior to 01.03.2013. A perusal of such notices would go to demonstrate that inquiry / investigation was pending against the assessee since prior to 01.03.2013. 17. Section 106 of the Finance Act, 2013 reads as under: “Person who may make declaration of tax dues. 106 (1) Any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the Chapter has been issued or made before the 1st day of March, 2013: Provided that any person who has furnished return under section 70 of the Chapter and disclosed his true liability, but has not paid the disclosed amount of service tax or any part thereof, shall not be eligible to make declaration for the period covered by the said return. Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period. Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period. (2) Where a declaration has been made by a person against whom,— (a) an inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of— (i) search of premises under section 82 of the Chapter; or (ii) issuance of summons under section 14 of the Central Excise Act, 1944, as made applicable to the Chapter under section 83 thereof; or (iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or (b) an audit has been initiated, And such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration.” 18. A perusal of sub-Section 2 (a) of Section 106 of the Finance Act, 2013 would go to demonstrate that where a declaration has been made by an assessee against whom inquiry or investigation in respect of service tax not levied or not paid or short levied or short paid has been initiated either by way of search of premises under Section 82 of the Chapter; or by issuing summons under Section 14 of the Central Excise; or by requiring the assessee to produce Accounts, documents and other evidence under the Chapter or Rules made thereunder or an audit has been initiated by the Department and such inquiry or investigation was pending prior to 01.03.2013, then Designated Authority shall by an order, and for the reasons to be recorded in writing, reject such declaration. 19. In my humble opinion, the word used in sub-Section 2 of Section 106 “shall” is sufficient to demonstrate, if either of the conditions is available, then Designated Authority shall have no other option except to reject the declaration made by the assessee under voluntary disclosure scheme. 20. 19. In my humble opinion, the word used in sub-Section 2 of Section 106 “shall” is sufficient to demonstrate, if either of the conditions is available, then Designated Authority shall have no other option except to reject the declaration made by the assessee under voluntary disclosure scheme. 20. In the present case, as observed hereinbefore, not only inquiry / investigation was initiated against the petitioner way back in the year 2011, but also vide notice dated 22.05.2012 assessee was required to furnish audited or unaudited accounts for the purpose of deciding the question of levying service tax. Since this information was sought by the Department from the petitioner much much prior to 01.03.2013 and investigation / inquiry was pending on 01.03.2013, therefore, Designated Authority had no other option except to reject the declaration made by the assessee under voluntary disclosure scheme. 21. The argument of learned counsel for the petitioner that benefit of voluntary disclosure, ordinarily, should be extended in favour of the assessee and same should not be denied on hyper technical ground cannot be accepted only for the reason of language used in Section 106 (2) (a) of the Finance Act, 2013 which mandates rejection of disclosure made if inquiry was pending on 01.03.2013, which was admittedly pending in the present case, which cannot be said to be a roaming inquiry in view of the fact that assessee was required to produce certain documents including audited or unaudited accounts. Moreover, language used in different notices issued to the assessee would go to show that general information was not sought from the assessee rather specific information was sought, as mentioned in the Notice. 22. In view of the discussion made hereinabove, all the petitions fail and are hereby dismissed. No order as to costs. 23. All the applications stand disposed of. 24. Let copy of this judgment be placed in the each connected petition.