Wednesday, 27 December 2017

CESTAT : Cannot reject VCES declaration on mis-classification plea, 'interpretation' difference not a substantial 'mis-declaration'

CESTAT allows assessee’s appeal, holds rejection of declaration filed under Service Tax Voluntary Compliance Encouragement Scheme (VCES) on ground of mis-classification of services as unsustainable; Notes that, while assessee categorised activity of construction of residential and commercial complexes under 'construction of complex service' and claimed abatement benefit under Notification No. 26/2012, Revenue sought to disregard the declaration and classify said activity as ‘works contract service’ on ground that same were so disclosed for VAT assessment purpose; Remarks, “(VCES) was framed by the Government with the intention of encouraging voluntary compliance and payment of service tax” and “declarations made under such scheme were to be accepted, by and large”; Observes, total amount of consideration received has not been found to be different from what was declared and Revenue has not produced any contract or document indicating that assessee did not make full declaration of service tax liability for the disputed period; Further, taking note of assessee's contention that definition of works contract service under VAT law and Finance Act, 1994, is different, holds that, different interpretation on classification of services does not tantamount to substantial misdeclaration : Bangalore CESTAT

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