HOTEL SOUTHSON PVT. LTD. Vs. CESTAT

JUDGEMENT

(1.) M/S Hotel Southson Private Limited represented by its Director K.Murugan, assailing the impugned order passed by the Assistant Commissioner (Designated Authority) in C.No.IV/16/80/2013/VCES/S.Tax/PF dated 03.10.2013 informing the petitioner that the declaration in Form VCES-1 is rejected, has filed the present writ petition.

(2.) Mr.M.K.Kabir, learned senior counsel for the petitioner heavily contended that the petitioner company has been running the hotel business since 1988 by providing service of accommodation, restaurant and rental for their customers. In the course of business, they are regular in paying the taxes including service tax etc. The petitioner company has also registered with the Central Excise department for paying the service tax under the head of accommodation service and restaurant service and thereupon paying the taxes regularly without any complaint. While so, an audit was conducted on 23.2.2013 and 25.2.2013 by the officers attached to the Additional Commissioner (Audit), Salem in the premises of the petitioner company and after a month, the Superintendent of Customs, Central Excise and Service Tax sent a letter dated 16.4.2013 informing the petitioner to pay service tax under the category of renting of immovable property service for the period from 1.10.2010 to 28.2.2013 with a further direction to pay a sum of Rs.36,10,239/- with interest and the late fee thereon. Only thereafter, the petitioner company came to know that they failed to pay the service tax for the category of renting of immovable service. In the meanwhile, the Government of India introduced and notified the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) for all those persons who have failed to pay service tax dues for the period 1 October 2007 to 31 December 2012. In view of the said scheme, the petitioner submitted an application dated 21.6.2013 before the Assistant Commissioner, Salem, the fourth respondent herein requesting to allow them to pay the service tax of Rs.32,85,485/-, since the petitioner is entitled to get the benefit of VCES. The petitioner also agreed to pay a sum of Rs.16,42,750/- as the first instalment towards service tax under the head of renting of immovable property service on accepting their declaration. On receipt of the application from the petitioner, the fourth respondent sent a letter dated 8.8.2013 calling upon them for enquiry and personal hearing with regard to VCES. Accordingly, the petitioner appeared before the fourth respondent on 12.9.2013. But during the meeting, the petitioner was surprised to know that the fourth respondent had mistaken with the fact that the inspection for audit conducted on 23.2.2013 and 25.2.2013 in their premises under the category of accommodation service and restaurant service were not finalised on the cut-off date, namely, 1.3.2013, hence, on the sole ground that the audit was not completed, rejected their declaration, which is impermissible. The learned senior counsel for the petitioner submitted that the rejection of the declaration of the petitioner made by the fourth respondent is against the circular dated 25.11.2013 issued by the Government of India, Ministry of Finance, Department of Revenue clarifying the provisions of Section 106(2) of the Finance Act, 2013 that if an inquiry, investigation or audit pending as on 1.3.2013 was being carried out for the period from 2008-11, the benefit of VCES would be eligible in respect of tax dues for the year 2012, namely, period not covered by the inquiry, investigation or audit. Therefore, when the said circular makes it further clear that the benefit of VCES would be eligible in respect of tax dues concerning any other issue in respect of which no inquiry or investigation is pending as on 1.3.2013, the declaration of the petitioner would be liable for rejection only if the issue is identifiable from summons or letters, but no summons or letters were issued asking the production of details in respect of renting of immovable property service, therefore, the rejection of the declaration on frivolous grounds is prima facie liable to be set aside. Adding further, the learned senior counsel submitted that as the renting of immovable property service was not covered in the audit report and that the petitioner also has not obtained any service tax registration certificate for renting of immovable property service, the petitioner is entitled to file the declaration under VCES. Hence the declaration is within the parameters of the VCES and the same ought not to have been rejected.

(3.) Continuing his arguments, the learned senior counsel submitted that aggrieved by the proceeding passed by the fourth respondent dated 3.10.2013, an appeal was preferred before the Commissioner of Central Excise (Appeals), Salem under Section 85 of the Finance Act, 1994. But the second respondent, without considering any of the legal issues, has wrongly disposed of the appeal on 17.1.2014, returning the same to the petitioner, treating it as disposed off. As against the said order, a further appeal was also preferred in Appeal No.ST/41647/2014 before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), the first respondent herein and the same was pending. However, in view of the filing of the present writ petition, the same was also withdrawn, therefore, the petitioner is not having any remedy except the intervention by this Court with the impugned order. Concluding his arguments, Mr.Kabir submitted that when the legal issues raised by the petitioner with regard to the applicability of VCES is pending for consideration, the third respondent issued a show cause notice dated 25.3.2014 calling upon the petitioner to pay a sum of Rs.38,21,642/-, for which a detailed reply has been submitted on 2.12.2014. However, without even waiting for the outcome of the matter, the demand notice dated 15.12.2014 has been issued, therefore, it is just and necessary to declare that the petitioner is entitled to get the benefit of VCES, as the petitioner has no other legal remedy.