SERVICE TAX VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME, 2013

Posted By on July 1, 2013

About VCES, 2013

Service Tax Voluntary Compliance Encouragement Scheme, 2013 has been proposed by the Finance Minister in budget for the year 2013-14, to encourage the defaulters of Service Tax, who have not declared and paid the ‘Tax Due’ for the period from 01.10.2007 to 31.12.2012 which upto 1st day of March 2013. The eligible assessee may voluntary declare the service tax due under this scheme and he will be refrained from imposition of interest and penalty. Once the service tax liability is paid off under this scheme, the case cannot be reopened by the department.

FAQ 1 – Who is Eligibility under VCES, 2013?

(1) Any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the Chapter has been issued or made before the 1st day of March, 2013:

Provided that any person who has furnished return under section 70 of the Chapter and disclosed his true liability, but has not paid the disclosed amount of service tax or any part thereof, shall not be eligible to make declaration for the period covered by the said return:

Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period.

(2) Where a declaration has been made by a person against whom,—

(a) an inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of —

(i) search of premises under section 82 of the Chapter; or

(ii) issuance of summons under section 14 of the Central Excise Act, 1944, as made applicable to the Chapter under section 83 thereof; or

(iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made there under; or

(b) an audit has been initiated, and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration.

FAQ 2 – What is the period covered under the scheme?

From 01-10-2007 to 31-12-2012

FAQ 3 – Is Registration under Service Tax required for applying under VCES, 2013?

For applying under the scheme, Registration under Service Tax is mandatory. Those who do not have a registration, shall first obtain registration and then apply under the scheme.

FAQ 4 – What is the Procedure for making declaration and payment of tax under the VCES, 2013?

  1. Make a true declaration of the ‘Tax Dues’ in Form VCES – 1 to the Designated Authority on or before 31-12-2013.
  2. Computation and Enclosures for ‘Tax Dues’:-
  • The tax due has to be computed for each service separately;
  • The calculation has to be furnished tax return period wise;
  • The calculation of tax dues has to be done in the format at S. No. 3 (F) (I) or as the case may be the Part ‘B’ of the Form ST 3, as existed during the relevant period;.
  • Calculation sheet showing tax due calculation should be enclosed with the declaration.

3. An acknowledgement will be issued by the designated authority in Form VCES – 2 within seven working days from the date of declaration.

4. Due dates for Payment of ‘Tax Dues’:-

  • Minimum 50% of Tax Dues upto 31-12-2013; 
  • Balance before 30-06-2014.

5.  Intimation of Payment of due Tax has to be submitted to the designated authority along with Proof of Payment and Copy of the Form VCES – 2.

6.  In case of failure to pay the tax before the dues dates mentioned above the same can be paid with interest upto 31-12-2014.

7.  On receipt of the intimation of discharge of the total liability of the ‘Tax Dues’ the designated authority shall issue an acknowledgement of discharge in Form VCES – 3 within seven working days from the date of receipt of the intimation.

Notes –

(a)   For Jaipur Region the designated Authority is Dy. Commissioner, Service Tax Division, Central Excise and Customs, Vidyadhar Nagar, Jaipur)

(b)   Tax Dues means Service tax and cess leviable thereon under any other Act  ( for e.g. Education Cess  2% , SHED Cess 1% , R & D Cess )  or due or payable or any other amount due or payable under section 73 A for the period October -2007 to 31-Dec.-2012 but not paid as on 01-Mar-2013.

FAQ 5 – What are the benfits under the VCES, 2013?

After receiving the certificate of discharge in Form VCES – 3, the assessee shall get immunity from interest; penalty and/or any other proceedings under the chapter and no matter shall be reopened thereafter in any proceedings under the chapter before any authority or court relating to the period covered by the declaration.

FAQ 6 – What will happen in case of failure to make true declaration?

Where the Commissioner of Central Excise has reason to believe that the declaration made by the assessee under the VCES, 2013 is ‘substantially false’, he may, for reasons to be recorded in writing, serve notice on the declarant in respect of such declaration requiring him to show-cause why he should not pay the tax dues not paid or short paid.

No action shall be taken after the expirty of 1 year from the date of declaration.

FAQ 7 – Under what circumstances the declaration can be rejected?

The declaration can be rejected by the designated authority only in case where an enquiry, investigation or audit under the service tax act is pending against the assessee as on the 1st day of March, 2013.

FAQ 8 – If declaration and payment is made for a higher amount, can the assessee claim a refund for the same?

No –  under any circumstances the tax paid under the scheme shall not be refunded.

This article has 2 comments

  1. If a person who is exempted from service tax liability and by mistake makes voluntary disclosure under this scheme (due to wrong advice) can he apply for exemption from disclosed liability? Please advice. Thanks.

    Reply
    • Dear Shekhar – VCES 2013 was an exceptional and one time law created for the benefit of the assessee with an intention to provide a blanket relief on payment of Tax. This scheme had explicitly provided that once the declaration has been filled and accepted (VCES 3 issued) it cannot be questioned or altered either by the tax authorities or the assessee.

      In your case, it may not be possible to take a refund of Tax mistakenly paid under VCES 2013 however going forward, if you firmly understand that you are providing an exempted service, you may surrender your service tax registration and get out if the Tax Net.

      Reply

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