Apna Awas Construction Private Limited vs. The Chief Commissioner, Department Of Customs

Held

The Court held that the rejection of the petitioner's declaration under the VCES, 2013, was unsustainable. The Court found that the "tax dues" definition in Clause 105(1)(e) of the Scheme pertains to tax due or payable for the period October 1, 2007, to December 31, 2012, which was not paid as of March 1, 2013. The Scheme, as per Clause 107, allowed declarations and payments to be made. The Court reasoned that there was no exclusionary clause within the Scheme that would disregard deposits made between March 1, 2013, and May 10, 2013 (the Scheme's incorporation date), especially when these deposits were towards tax arrears. The Court found support in judgments from the Bombay and Gujarat High Courts, which had considered similar objections and held that deposits made before the Scheme's incorporation date, but after March 1, 2013, should be accepted. The Court also noted a patent illegality in the revenue's action of invoking Section 87 of the Finance Act, 1994, to recover the entire amount, even if two deposits were disputed, as they were still tax deposits. The ratio decidendi is that deposits made towards tax arrears between the declaration date (March 1, 2013) and the Scheme's incorporation date (May 10, 2013) are valid for the purpose of the VCES, 2013, unless expressly excluded by the Scheme's provisions. The Court quashed the order dated November 17, 2014, and the attachment notice dated November 20, 2018, and directed the respondents to refund Rs. 34,32,226/- within four weeks.

Facts

The petitioner, Apna Awas Construction Private Limited, challenged a notice dated November 20, 2018, issued by the Deputy Commissioner, CGST, under Section 87 of the Finance Act, 1994. This notice directed IndusInd Bank to pay outstanding service tax dues of the petitioner, resulting in a recovery of Rs. 34,32,226/-. The petitioner also challenged an order dated November 17, 2014, by the Assistant Commissioner, which rejected their declaration under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES, 2013). The rejection was based on the grounds that two deposits made by the petitioner towards tax arrears were not covered under the Scheme. These deposits, made on March 7, 2013, and March 12, 2013, each of Rs. 7 lakhs, were made after the declaration date of March 1, 2013, but before the Scheme's incorporation date of May 10, 2013.

Key Issues

1. Whether the rejection of the petitioner's declaration under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES, 2013) by the Assistant Commissioner, based on two deposits made after March 1, 2013, but before May 10, 2013, was legally sustainable? Petitioner's argument: The petitioner contended that the VCES, 2013, defines "tax dues" as service tax due or payable for the period October 1, 2007, to December 31, 2012, not paid as of March 1, 2013. They argued that deposits made between March 1, 2013, and May 10, 2013, should be considered valid under the Scheme, as there was no exclusionary clause preventing such deposits. They relied on the plain reading of the Scheme and the fact that the deposits were towards tax arrears. Revenue's argument: The revenue, through the Assistant Solicitor General, raised a preliminary objection regarding the availability of an alternative remedy. However, the Court overruled this. The revenue's primary contention, as understood from the judgment, was that deposits made after March 1, 2013, were not covered by the Scheme, leading to the rejection of the declaration and subsequent recovery proceedings.