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30 Jun 2014

Deadline prescribed under VCES could not be extended by any authority

In a recently concluded case of Teknow Overseas (P) Ltd. v. Assistant Commissioner of Service Tax (VCES), Delhi, (2014) 45 taxmann.com 542 (Delhi), honourable High Court of Delhi held that the benefit of Service Tax Voluntary Compliance Encouragement Scheme is available only upon depositing the initial 50% of the declared amount mandatorily on or before 31st December 2013 and authorities do not have any power to grant extension of time.

In the cited case, the assessee declared a liability of Rs. 387 lakhs under the VCES against which he claimed to have paid Rs. 81.4 lakhs before 1-3-2013 and Rs. 118 lakhs by 10-7-2013. The department rejected the declaration on the grounds that the sum paid prior to 1-03-2013 could not be considered as tax dues complying to Section 105(e) of Finance Act, 2013 and 50% of the balance Rs. 305.6 lakhs had not been paid by 31-12-2013. Assessee, aggrieved by the act of department, claimed for an extension in the time limit for paying the said 50% dues.

The honourable High Court held that right of assessee to claim benefit of the scheme is dependent upon the deposition of initial 50% amount, which is a mandatory condition. The power of extension of any kind has not been provided to any authority. In fact, Section 110 has been added in the Act supra for spelling out the consequences for failure to pay tax dues within the said time limit. The only relief available is by way of power to remove difficulties, conferred upon the Central Government. The petition was dismissed on the said terms.