Whether rejection of VCES declaration for arithmetical error proper?

PJ/Case Law /2016-17/3254

Case:-RENUKA MANGAL SEVA KENDRA VERSUSCOMMISSIONER OF C.E. & CUS., AURANGABAD

Citation:- 2016 (43) S.T.R. 135 (Tri. - Mumbai)

Brief Facts:-The brief fact of the case is that the appellant filed VCES declaration on 31-12-2013 wherein the total dues declared was Rs. 2,78,118/-. The appellant as per the provisions paid 50% of the said amount, i.e., Rs. 1,39,100/- on 31-12-2013. The second instalment of 50%, i.e., Rs. 35,288/- and Rs. 1,03,730/- on 13-5-2014 & 30-6-2014 respectively. On finalization of balance sheet, the Chartered Accountant pointed out from the reconciliation of the total gross receipt and it was found that the gross receipt was shown short and accordingly the total dues was declared short by Rs. 35,288/-. The appellant also requantified and paid Rs. 35,288/-. Considering the short-amount declared in the VCES declaration the balance amount along with interest which comes to Rs. 40,479/- was paid on 20-12-2014. With reference to the VCES declaration, the show cause notice was issued to the appellant wherein it was proposed to treat the VCES declaration as substantially false and also proposed to demand Rs. 5,86,789/- without considering the abatement as provided under Notification No. 1/2006-S.T., dated 1-3-2006 to the extent of 40%. In the adjudication, the ld. Commissioner held that due to declaration of short amount dues the declaration is substantially false. He maintaining the payment of Rs. 2,78,118/- confirmed the balance amount of Rs. 3,08,672/- and also demanded interest under Section 75 of the Act and imposed penalty of equal amount under section 78 of the Act. Being aggrieved by the impugned order, the appellant is before Tribunal.

Appellant’s Contention:-Shri Dwarkadas S. Ladda, ld. counsel for the appellant submits that they filed VCES declaration for Rs. 2,78,118/- on the basis of gross receipt from the books of account. However, later on reconciliation, it was found that the gross value as well as the tax dues declared by them was short by Rs. 35,288/- due to arithmetical mistake. However, re-quantifying the appellant submitted the correct figure before the department and also paid the total amount of correct dues along with interest total amounting to Rs. 3,18,597/-. He submits that the ld. Commissioner has not given any finding on the issue of abatement and decided the entire case on the basis that the declaration made by the appellant is substantially false. He submits that the gross amount receipt is inclusive of food/catering therefore, they are legally entitled for the abatement of 40% as provided under Notification No. 1/2006-S.T. As regard the allegation of false declaration, he submits that the mistake has occurred only due to arithmetical error, which they have corrected without pointing out by the department. We have paid the entire amount of dues before the due date and in case of short-payment in the first installment of 50%, they also paid interest as provided under the scheme.

Respondent Contention:-Shri A.B. Kulgud, ld. Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that it is admitted fact that in the VCES declaration filed by the appellant, the total dues was wrongly declared which amounts to a false declaration under the VCES Scheme. It is a foremost condition that true and correct declaration has to be made and for any reason the declaration is found to be wrong, the same will amount to false declaration and for this reason itself the declaration is liable to be rejected.

Reasoning of Judgment:-On perusal of records it is found that firstly the ld. Commissioner has not given proper finding as regard the abatement available to the appellant to the extent of 40% from the gross value as provided under Notification No. 1/2006-S.T. On perusal of the books of account of the appellant, it was found that the gross receipt shown in the balance sheet/profit and loss account is inclusive of catering/food. As per the Notification No. 1/2006-S.T. the abatement of 40% is allowed subject to condition that the gross amount charge is inclusive of food items. In view of the fact that the cost of the food item is inclusive in the gross amount charged by the appellant, they are entitled for the abatement. As regard, the charge of false declaration, Tribunal found that the mistake has occurred due to arithmetic error in quantifying the due and the same was pointed by the appellant themselves and made good by making the payment of correct amount, and for the delay in making the payment, they also paid the interest. From this fact, Tribunal do not find any intention of the appellant to make a false declaration. This is only due to arithmetical error that there is mistake in declaring the actual dues. Tribunal also find that the appellant have paid the entire amount of correct dues along with interest before the last date, i.e., before 31-12-2014. Therefore, Tribunal do not find any reason why the VCES declaration should not be accepted. In view of above discussion, the impugned order is set aside and the appeal of the appellant is allowed.

Decision:-Appeal allowed.

Comment:-The crux of the case is thatthe VCES declaration cannot be rejected merely for arithmetical error in declaring the tax liability. When the assessee voluntarily pointed out the short tax liability and paid the same with interest before the last date of paying second instalment, there cannot be any malafide intention on assessee’s part. Hence, it was concluded that VCES declaration filed by appellant should be accepted. However, there are contrary decisions of various High Courts wherein it has been held that benefit of a amnesty scheme cannot be extended if the conditions of the scheme are not complied with.

Prepared by:- Bharat Chouhan

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PJ/Case Law /2016-17/3254

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