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Commissioner of Central Excise, Customs & Service Tax, Hyderabad-I Vs. Giridhari Constructions - (Customs, Excise and Service Tax Appellate Tribunal) (21 Oct 2019)

Department can re-open proceedings after issuance of discharge certificate only when there is substantial and conscious mis-declaration


Service Tax

The brief facts of the case are that, the Respondents filed VCES declaration under Section 107 of the Finance Act, 2013 as amended. They paid service tax declared by them under Construction of Residential Complex services and department issued discharge certificate. Later show cause notice dated 29th February, 2014 was issued proposing to re-classify the services for which the Respondent had filed declaration as Works Contact Services. After due process of law, the original authority set aside the demand proposed under WCS holding that, services for which the respondent has paid service tax would fall under Construction of Residential Complex services. Aggrieved by such order, department is now before the Tribunal.

The discharge certificate is issued by the department on 11th April, 2014 and the show cause notice is subsequently issued on 29th December, 2014. The Tribunal in the case of Ashok Kumar Kesharwani vs. Commissioner of C. Ex. and S.T., Kanpur had occasion to analyse similar situation wherein the Tribunal held that, after acceptance of the declaration and issuance of discharge certificate, the department cannot reopen the proceedings in respect of the declarations made. It would result in deviation from the immunity provided under section 108 of the Finance Act, 2013 and would render the scheme redundant and meaningless.

Moreover, in the present case, the Respondent had declared the services rendered by them as per the circular issued by the Board. After issuing discharge certificate, the department as an afterthought has issued the SCN proposing to classify the services under WCS, so as to bring the construction of residential complexes done in 7.02 acres also within the ambit of levy of service tax. This is only an issue of interpretation. When the declaration is filed, the department gets sufficient time to enquire and satisfy as to the category of service and value declared. On entertaining a different view, the department cannot allege mis-declaration. There should be substantial and conscious mis-declaration for reopening a matter for which discharge certificate is issued. There is no evidence to show that, there is any conscious and substantial mis-declaration on the part of the respondent.

The Tribunal in the case of Sravanthi Contractors and Developers had followed the decision in the case of Frontline Builders & Developers vs. Commissioner of Central Excise to hold that, unless there is substantial mis-declaration, the VCES assessment cannot be reopened. Impugned order does not call for any interference. Appeal filed by the department is dismissed.

Relevant : Ashok Kumar Kesharwani vs. Commissioner of C. Ex. and S.T., Kanpur MANU/CN/0050/2019; Frontline Builders and Developers vs. Commissioner of Central Excise, Customs and Service Tax, Calicut MANU/CB/0231/2017


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