The Voluntary Compliance Encouragement Scheme, 2013 (VCES) allows service providers to settle outstanding service tax liabilities for the period from October 2007 to December 2012 without penalties. Eligible taxpayers must have no pending inquiries or orders and must file a declaration by December 2013. Taxpayers must pay declared taxes using Form VCES-1 and will receive an acknowledgement of discharge within 7 days of payment using Form VCES-3. While the acknowledgement is generally conclusive, the tax authority can reopen the case within 1 year if the declaration was substantially false. The scheme aims to encourage voluntary compliance in the service tax sector.

1. Voluntary Compliance
Encouragement Scheme, 2013
(VCES)-Service tax

2. Overview
The Scheme has been introduced by Chapter VI of the Finance
Act, 2013 called ‘Service tax Voluntary Compliance
Encouragement Scheme, 2013.
Through the scheme Government has given opportunity to
Service Industry to settle their Service tax default voluntarily for
the period from 01.10.2007 to 31.12.2012, without any penal
actions.

3. Eligibility Criteria for the Scheme
Following conditions shall be satisfied for availing the scheme:
1) No notice/order/determination under section 72/73/73A of
the chapter has been issued or made before the 1st day of
March, 2013;
2) No inquiry or investigation shall be pending on 01.03.2013
by way of:
 Search of premises,
 Issuance of summons,
 Requiring production of accounts, documents or other
evidence,
 An Audit;
3) The declaration shall be made on or before 31.12.2013.

4. Procedure
Service Tax Voluntary Compliance Encouragement Rules, 2013,
has been notified by Notification No. 10/2013-ST, dated
13.05.2013:
1) Declaration shall be made in Form VCES-1,
2) Designated Authority on receipt of declaration shall issue an
acknowledgement in Form VCES-2 within a period of 7
working days from the date of receipt of the declaration,
3) The CENVAT credit shall not be utilized for the payment of
tax dues,
4) The designated Authority shall issue an ‘acknowledgement
of discharge’ in Form VCES-3. The acknowledgement shall
be issued within a period of 7 working days from the date of
furnishing of details of payment of tax dues.

5. Some Issues
1) Where a notice/order/determination has been issued to a
person in respect of any period on any issue, No declaration
can be made on the same issue for any subsequent period.
2) If a declarant fails to pay the tax dues, so declared or part
thereof up to 30th June, 2014, he shall pay the same on or
before 31st December, 2014 along with interest for the period
of delay starting from 01st July, 2014.

6. Conclusive Nature of
Acknowledgement of discharge
1) As per sub-section (2) of section 98 of Finance
Act, 2013, Acknowledgement of discharge shall become
conclusive upon issuance. No matter shall be reopened
thereafter in any proceedings under the chapter before any
authority or court relating to period covered by such
declaration.
But, As per section 101 of Finance Act, 2013, where the CCE
has reasons to believe that the declaration so made was
substantially false, he can take action within a period of 1
year from the date of declaration.

7. Contact us
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