VCES - First Instalment not paid - Disqualified from VCES - SC Rejects SLP

By Vijay Kumar

YESTERDAY the Supreme Court dismissed an SLP filed by Manpreet Engineering And Construction Co. in a VCES case.

The assessee had been disqualified from the Voluntary Compliance Encouragement Scheme, 2013 (VCES, 2013) and the immunity provided under section 108(1) of the Finance Act, 2013 was withdrawn, as he had not deposited 50% of the tax dues so declared under Section107(1) and submitted the proof of such payment to the designated authority.

On a writ petition, the High Court upheld the impugned order on the grounds: (2016-TIOL-1456-HC-JHARKHAND-ST)

1. The VCES, 2013 is already a liberal scheme floated for those declarants, who have committed breach of the taxing statute

2. the payment of the service tax liability is divided into two instalments. First instalment is of minimum 50% to be paid on or before 31st December, 2013

3. The scheme is nothing but a policy decision of Union of India and this court will be extremely slow and careful in making further liberal interpretation of the VCES, 2013, because this court is not sitting in appeal against the said scheme nor this court can replace an existing scheme with a better one.

4. In a taxing statute interpretation ought to be made strictly. Court can neither replace all these clauses of VCES, 2013 nor further instalments can be given by the court in exercise of powers under Article 226 of the Constitution of the India.

5. 'substantial compliance' has no place in a taxing statute, otherwise every declarant or assessee will partly comply with a scheme or provision of the taxing statute and will say that there is substantial compliance, which will lead to nothing but chaos and court cannot be a party to this.

6. once the clauses of the VCES, 2013 is violated, the declarant is not entitled to get benefit of the said scheme.

The Supreme Court yesterday dismissed the SLP of the assessee. Please see 2016-TIOL-124-SC-ST