Service tax vces

An Overview of the
Voluntary Compliance Encouragement
Scheme (VCES)
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What Happens When you Fail toWhat Happens When you Fail to
Pay your Service TaxPay your Service Tax
Recovery of Service Tax is governed by section 73(1) of theRecovery of Service Tax is governed by section 73(1) of the
FinanceFinance
Act,1994.Act,1994.
On Service Tax beingOn Service Tax being
 Not LeviedNot Levied
 Levied Not PaidLevied Not Paid
 Short LeviedShort Levied
 Short PaidShort Paid
Relevant provisions are applicable to recover the ServiceRelevant provisions are applicable to recover the Service
Tax along withTax along with
 Interest on Account of DelayInterest on Account of Delay
 Penalties for : Fraud/Collusion/Misrepresentation ofPenalties for : Fraud/Collusion/Misrepresentation of
Facts/Suppression of Facts/contravention of any of theFacts/Suppression of Facts/contravention of any of the
provisions of this chapter or of the rules made there under withprovisions of this chapter or of the rules made there under with
intent to evade payment of service tax,intent to evade payment of service tax,
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Circular 967/01/2013-CX datedCircular 967/01/2013-CX dated
01.01.201301.01.2013
Circular 967/01/2013-CX dated 01.01.2013 brings out additionally,Circular 967/01/2013-CX dated 01.01.2013 brings out additionally,
The allowability of Recovery during pendency of stayThe allowability of Recovery during pendency of stay
petitions before the Appellate Authorities being.petitions before the Appellate Authorities being.
 Various High Courts struck down the CircularVarious High Courts struck down the Circular
 Deterrents to Voluntary Compliance:Deterrents to Voluntary Compliance:
 InterestInterest
 Late Filing Fees & Delayed Registration PenaltiesLate Filing Fees & Delayed Registration Penalties
 Despite Section 73(3), suppression routinely alleged even forDespite Section 73(3), suppression routinely alleged even for
voluntary compliancevoluntary compliance
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Offences and ProsecutionOffences and Prosecution
OffenceOffence Term of Imprisonment and Nature of OffenceTerm of Imprisonment and Nature of Offence
>50 Lakhs>50 Lakhs < 50 Lakhs< 50 Lakhs Cognizable i.e inCognizable i.e in
the Knowledgethe Knowledge
a. Knowingly evades the payment ofa. Knowingly evades the payment of
service tax.service tax.
6 months to 36 months to 3
yearsyears
upto 1 yearupto 1 year Non cognizable andNon cognizable and
bailablebailable
b.b. Avails and utilizes credit of taxes orAvails and utilizes credit of taxes or
duty without actual receipt of taxableduty without actual receipt of taxable
service or excisable goods either fully orservice or excisable goods either fully or
partially in violation of the rulespartially in violation of the rules..
yearsyears
bailablebailable
c.c. Maintains false books of account or failsMaintains false books of account or fails
to supply any information or suppliesto supply any information or supplies
false informationfalse information..
yearsyears
bailablebailable
d. Collects any amount as service tax butd. Collects any amount as service tax but
fails to pay the amount so collected to thefails to pay the amount so collected to the
credit of the Central Government beyondcredit of the Central Government beyond
a period of six monthsa period of six months
yearsyears
CognizableCognizable
upto 1 year.upto 1 year. Non cognizable andNon cognizable and
bailablebailable
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What is Voluntary ComplianceWhat is Voluntary Compliance
Encouragement SchemeEncouragement Scheme
(VCES)?(VCES)?
FM Chidambaram came out with this Amnesty scheme,FM Chidambaram came out with this Amnesty scheme,
serving two targets :serving two targets :
 Recover Service Tax efficiently and in full, asRecover Service Tax efficiently and in full, as
maximum as possiblemaximum as possible
 In a way that is not hostileIn a way that is not hostile
Eligibility:Eligibility:
Persons having Tax liability between01.10.2007 toPersons having Tax liability between01.10.2007 to
31.12.2012 as on 01.01.201331.12.2012 as on 01.01.2013
And not having any notice served on them, i.e.And not having any notice served on them, i.e.
Department is unaware of till date of their liability.Department is unaware of till date of their liability.
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Who is not Eligible for VCES?Who is not Eligible for VCES?
 Assessees who haven’t paid Tax but have disclosed the same inAssessees who haven’t paid Tax but have disclosed the same in
their Returnstheir Returns
 Tax paid before 01.01.2013 but Interest/ penalties are unpaid.Tax paid before 01.01.2013 but Interest/ penalties are unpaid.
 Assessees to whom Show Cause Notice has been Issued butAssessees to whom Show Cause Notice has been Issued but
Adjudication is PendingAdjudication is Pending
 Tax remains unpaid on a Show Cause Notice raised for a priorTax remains unpaid on a Show Cause Notice raised for a prior
period.period.
 Summons Issued/Search Conducted, Inquiry Pending/LetterSummons Issued/Search Conducted, Inquiry Pending/Letter
Compelling Production of Books of Accounts/Documents and/orCompelling Production of Books of Accounts/Documents and/or
Audit for the same initiated and in progress i.e. not completeAudit for the same initiated and in progress i.e. not complete
 Tax Pending for a period other than Mentioned in the previous SlideTax Pending for a period other than Mentioned in the previous Slide
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What does VCES offer :What does VCES offer :
 Pay pending Service Tax for the period 01.10.2007 toPay pending Service Tax for the period 01.10.2007 to
31.12.2012 on a self –assessment basis.31.12.2012 on a self –assessment basis.
A Clarification in this regard being such amount CANNOTA Clarification in this regard being such amount CANNOT
BE ADJUSTED against CENVAT CREDIT and has to beBE ADJUSTED against CENVAT CREDIT and has to be
PAID IN CASH.PAID IN CASH.
 The Cherry on the Cake being :The Cherry on the Cake being :
 WITHOUT INTERESTWITHOUT INTEREST
 WITHOUT PENALTYWITHOUT PENALTY
 AND THERE BEING CLOSURE OF PROCEEDINGS onAND THERE BEING CLOSURE OF PROCEEDINGS on
payment of the above mentioned Taxpayment of the above mentioned Tax
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Process of Applying for VCESProcess of Applying for VCES
Obtain Registration of ServiceTax(in caseObtain Registration of ServiceTax(in case
already not obtained e.g Start ups)already not obtained e.g Start ups)
Make Application in VCSE 1Make Application in VCSE 1
Get Acknowledgement of Application in VCSE2Get Acknowledgement of Application in VCSE2
Final Discharge of Acknowledgement in VCSE3Final Discharge of Acknowledgement in VCSE3
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Scheme of PaymentScheme of Payment
DUE DATEDUE DATE AMOUNT OF SERVICE TAXAMOUNT OF SERVICE TAX
PAYABLEPAYABLE
By 31..03.2013By 31..03.2013 50 % of the Tax Payable, WITHOUT50 % of the Tax Payable, WITHOUT
INTERESTINTEREST
By 30.06.2014By 30.06.2014 Balance 50% of the Tax Payable,Balance 50% of the Tax Payable,
WITHOUT INTERESTWITHOUT INTEREST
By 31.12.2014By 31.12.2014 Balance unpaid, WITH INTERESTBalance unpaid, WITH INTEREST
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Service tax vces

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