Voluntary compliance encouragement scheme under service tax laws


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Voluntary compliance encouragement scheme under service tax laws

  1. 1. Voluntary Compliance Encouragement Scheme underSERVICE TAX LAWSThe Service Tax Voluntary Compliance Encouragement Scheme (VCES) has come intoeffect upon enactment of the Finance Bill 2013 on the 10thMay, 2013. The said schemeprovides an opportunity to any person whose service tax is due or has short paid andhas not declared in his service tax return to pay only the service tax amount and getimmunity from interest and penalty. The person availing the opportunity has to declarehis service tax liability for the period 1st October, 2007 till 31st December, 2012. Thedeclarant has to follow the said steps for compliance of the said scheme in order to getimmunity from interest and penalties under the Finance Act, 1994, which are mentionedhere under:The procedures to be followed are as under:-1. The person who wishes to make a declaration under the Scheme, shall, if notalready registered, take registration with the Service Tax Department.2. The declaration in respect of tax dues under the Scheme shall be made in FormVCES -1 before 31stDecember, 2013. The calculation of tax dues has to be submittedas per format of Sr. No. 3F(1) of the ST-3 returns.3. The Assistant Commissioner on receipt of declaration shall issuean acknowledgement in Form VCES-2 within a period of seven working days from thedate of receipt of the declaration.4. The tax due has to be paid in the following manner:Percentage of tax to bepaid…..Due date by which tax hasto be paid…. Interest payable if…..50 % of the Tax Dues Before 31st December,2013 –Remaining 50% ofthe Tax Dues Before 30th June, 2014 –If remaining 50% was not Before 31st December, Along with interest at the
  2. 2. paid before 30th June,2014 2014 rate 15 % or 18% as thecase may be from 1st July,2014 till the date ofpayment.5. The Assistant Commissioner shall issue an acknowledgement of discharge under inForm VCES- 3.Theacknowledgement of discharge shall be issued within a period ofseven working days from the date of furnishing of details of payment of tax dues in fullalong with interest, if any, by the declarant.Some FAQ on the said Schemes:Reference : Circular No. 169/4/2013 dated 13/05/2013.1. Whether a person who has not obtained service tax registration so far can make adeclaration under VCES?Ans: Yes, any person who has tax dues can make a declaration in terms of theprovisions of VCES; he will be required to take registration before making suchdeclaration.At the time of registration a form of declaration has to be filled up by every person. Incase where a person is taking registration for VCES, kindly attach a covering letter tothe service tax unit Superintendent that the person is taking registration for declarationin VCES.2. Whether a declarant shall get immunity from payment of late fee/penalty for havingnot taken registration earlier or not filed the return or for delay in filing of return.Ans: Yes. It has been provided in VCES that, beside interest and penalty, immunitywould also be available from any other proceeding under the Finance Act, 1994 andRules made there under.3. Whether an assessee to whom show cause notice or order of determination has beenissued can file declaration in respect of tax dues which are not covered by such SCN ororder of determination?
  3. 3. Ans: The assessee to whom show cause notice is issued can declare his other tax duesunder the Scheme which are not the subject matter of the SCN or Order or which is notcovered under any SCN or order issued to him.4. Whether CENVAT Credit can be availed for payment of service tax under thisScheme?Ans: No, The CENVAT credit shall not be utilised for payment of tax dues under theScheme.5. Whether this Scheme can be availed in case a search or audit or an inquiry isinitiated against the assessee.Ans. No, the assessee cannot avail the benefit of the said scheme if any inquiry orinvestigation initiated against the assessee and is pending as on the 1st day of March,2013.6. Whether a communication from department seeking general information from thedeclarant would lead to rejection of declaration?Ans: No merely receiving a letter seeking general information from the declarant wouldnot lead to rejection of the application. Unless said letter is issued:i. Under section 14 of the Central Excise Act as made applicable to service tax videsection 83 of the Finance Act,1994.ii. Under section 72 of the Finance Act, 1994iii. Under rule 5A of the Service Tax Rules, 1994Other communication from the department would not lead to rejection of the declaration.7. Whether there is any limit regarding the amount of declaration?Ans: No, there is no monetary limit specified in the Act or rules made under in thisbehalf.
  4. 4. 8. If the application made by the declarant is rejected, can an inquiry against thedeclarant be initiated by the department?Ans: Yes, an inquiry can be initiated if the declaration is rejected as there is norestriction in this regard. The information furnish by the declarant can form the basis ofinitiation of inquiry against the same.CREATED BY TEAM PGCPROGLOBAL CORPWWW.PROGLOBALCORP.COMProglobalcorp.wordpress.comEmail:proglobalcorp@gmail.com