Rejection of declaration filed by Company under VCES, without giving any reasons is violation of principles of natural justice

Karnataka High Court: While passing the order in a writ petition filed under Articles 226 and 227 of the Constitution praying to quash the order issued by the Deputy Commissioner of Service Tax, a Single Judge Bench of Vineet Kothari, J. allowed the petitions and set aside the impugned order.

The petitioner Company was aggrieved by the order of the first respondent whereby it rejected the declaration filed by the petitioner Company under VCES (Voluntary Compliance Encouragement Scheme). It was contended that the impugned order was communicated to the petitioner without affording any opportunity of hearing to the petitioner.

The Court perused all the documents including the Circular issued by the Ministry of Finance in which the Ministry took a categorical stand that before rejection of the declaration, the Designated Authority will give an opportunity of hearing to the applicant concerned. The Court found that there was a non-compliance of this order on the part of the Designated Authority which resulted in violation of principles of natural justice.

Accordingly, it was held that the matter deserved to be reconsidered. The impugned order was set aside and the matter was remanded back to the concerned Designated Authority for fresh consideration. [Pierian Services (P) Ltd. v. Deputy Commissioner of Service Tax, Writ Petition Nos. 36361/2015 & 55409/2015 (T-TAR), dated September 11, 2017]

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