09 November 2013

VCES Case Law



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CASE LAW ON VCES 2013
We are pleased to share with you the following tax alert:
Bombay High Court in the case of M/s. Verchaska Infotech private Ltd. vs. Union of India and ors. (WRIT PETITION NO.9920 OF 2013) has given a judgement on declaration made under VCES.
Background:
In this case the petitioner has challenged the notice dated 1 October 2013 issued by the Superintendent, Group X, Anti Evasion, Service Tax II, Mumbai (respondent No.2) under Section 87(b) of the Finance Act 1994. By the impugned notice dated 1 October 2013, the respondent No.2 has directed the petitioner bankers viz. Respondent Nos 5 to 8 banks not to allow any withdrawal from the account of the petitioner to the extent of Rs.1.22 crores as the same is due to the revenue from the petitioner.
Petitioner Contention
The petitioner has contested that part of the period i.e. April 2012 to Dec 2012 is covered by VCES 2013 and that they have already applied for the same on 10.10.2013 and thus 50% of the demand for that period is payable by 31st December 2013.
Respondent Contention:
The Respondent department on the other hand has contested that the petitioner has made application under the Scheme on10 October 2013 and therefore, respondent would take a decision thereon by 10 November 2013. However, it is contended that till the petitioner's application is accepted, it cannot be exempted from its liability to pay the amount of the service tax which has admittedly not been paid. It is submitted that the petitioner has collected the service tax from its customers though the petitioner claims the benefit of Rs.60,40,684/as cenvat credit the same is subject to verification by the revenue.
Observation of the HC
The Hon'ble High Court while noting the above contentions has directed the petitioner to deposit Rs. 8 lacs being 50% of the amount payable by 31st December 2013. The High Court also for the time being allowed the contention of the petitioner that they had a total amount of Rs. 60.40 lac as cenvat credit. The High Court also directed the petitioner to file an undertaking with the department that they would be discharging the service tax liability from the month of September 2013 onwards in accordance with law. Thus, both the above observations of the Court being fulfilled, the order for releasing the attachment of bank account would be operational. The Court also made it clear that this order would be valid only till a decision is taken on the application of settlement under VCES 2013.          
The copy of the order is attached for your ready reference..
Regards,

CA. VMV S RAO
 SOURCE
CA Ankit Kanodia|Partner - Tax & Regulatory
S.K.Kanodia & Associates|Chartered Accountants
39A, Jorapukur Square Lane(Behind Girish Park),
Room # 202, Kolkata- 700006, WB, INDIA.

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