Service tax department started Voluntary Compliance Encouragement Scheme (VCES) scheme on 10 May 2013. There are many issue and question raised on rules and penalty in it. So service tax department giving clarification on the issued raised on VCES scheme. In this regard, Service tax department issued a circular no. 174/09/2013 dated 25 November 2013. Full circular is as under.
The Service Tax Voluntary Compliance Encouragement Scheme (VCES) has come into effect from 10.5.2013. Most of the issues raised with reference to the Scheme have been clarified by the Board vide circular Nos. 169/4/2013-ST, dated 13.5.2013 and No. 170/5/2013-ST, dated 8.8.2013. These clarifications have also been released in the form of FAQs. Attention is also invited to letter F. No. 137/50/2013-ST, dated 22.8.2013 as regards the action to be taken by the field formations for effective implementation of the Scheme. A number of interactive sessions have also been held at various places to ascertain and address the concerns of trade on any aspect of the Scheme.
2. In the recently held interactive sessions at Chennai, Delhi and Mumbai, which were chaired by the Hon’ble Finance Minister, the trade had raised certain queries and also expressed some apprehensions. Most of these issues have already been clarified in the aforementioned circulars/FAQs. Certain issues raised in these interactive sessions, which have not been specifically clarified hitherto or clarified adequately, are discussed and clarified as below.
S.No.
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Issue raised
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Clarification
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1
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An instance was
brought to notice wherein a declaration was returned probably on the ground
that it was incomplete.
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As has already been
directed by the Board, vide the said letter dated 22.8.2013 (para 2.4 of
the letter), the designated authority shall ensure that no declaration is
returned. In all cases, declaration should be promptly received
and duly acknowledged. Request for clarification should be dealt with
promptly. Defects in the application, if any, should be explained to the
declarant and possible assistance be provided in rectifying these defects.
The effort must be to accept a declaration, as far as possible, and recover
the arrears of tax.
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2
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An apprehension was
raised that declarations are being considered for rejection under section 106
(2) of the Finance Act, 2013, even though the “tax dues” pertain to an issue
or a period which is different from the issue or the period for which inquiry
/investigation or audit was pending as on 1.3.2013.
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Section 106(2)
prescribes four conditions that would lead to rejection of declaration,
namely,
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(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,-
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(i) search of premises under
section 82 of the Finance Act,1994 ; or
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(ii) issuance of summons
under section 14 of the Central Excise Act, 1944; or
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(iii) requiring production of
accounts, documents or other evidence under the Finance Act, 1994 or the
rules made there under; or
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(b)
an audit has been initiated,
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and such inquiry, investigation or
audit was pending as on the 1st day of March, 2013.
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These conditions may be construed
strictly and narrowly. The concerned Commissioner may ensure that no
declaration is rejected on frivolous grounds or by taking a wider
interpretation of the conditions enumerated in section 106(2). If the issue
or the period of inquiry, investigation or audit is identifiable from summons
or any other document, the declaration in respect of such period or
issue alonewill be liable for rejection under the said provision.
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Examples:
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(1) If an inquiry, investigation or
audit, pending as on 1.3.2013 was being carried out for the period
from 2008-2011, benefit of VCES would be eligible in respect of ‘tax dues’
for the year 2012, i.e., period not covered by the inquiry, investigation or
audit.
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(2) If an inquiry or investigation,
pending as on 1.3.2013 was in respect of a specific issue, say renting of
immovable property, benefit of VCES would be eligible in respect of ‘tax
dues’ concerning any other issue in respect of which no inquiry or
investigation was pending as on 1.3.2013.
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It is also reiterated that the
designated authority, if he has reasons to believe that the declaration is
covered by section 106(2), shall give a notice of intention to reject the
declaration within 30 days of the date of filing of the declaration stating
such reasons to reject the declaration. Commissioners should ensure that this
time line is followed scrupulously.
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3
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Whether benefit of
VCES would be available in cases where documents like balance sheet, profit
and loss account etc. are called for by department in the inquiries of roving
nature, while quoting authority of section 14 of the Central Excise Act in a
routine manner.
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The designated
authority/ Commissioner concerned may take a view on merit,
taking into account the facts and circumstances of each case as to whether
the inquiry is of roving nature or whether the provisions of section 106 (2)
are attracted in such cases.
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4
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Whether the benefit of
the Scheme shall be admissible in respect of any amount covered under the
definition of ‘taxes dues’, as defined in the Scheme, if paid by an assesses
after the date of the Scheme coming into effect, (i.e., 10.5.2013), but
before a declaration is filed
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Yes, benefit of the
Scheme would be available if such amount is declared under the Scheme
subsequently, along with the remaining tax dues, if any, provided that Cenvat
credit has not been utilized for payment of such amount.
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Example:
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A person has tax dues
of Rs 10 lakh. He makes a payment of Rs 2 lakh on 15.5.2013, without making a
declaration under VCES. He does not utilize Cenvat credit for paying this
amount. Subsequently, he makes declaration under VCES on 1.7.2013. He may
declare his tax dues as Rs 10 lakh. Rs 2 lakh paid before making the
declaration will be considered as payment under VCES.
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5
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Whether declaration
can be made in such case where service tax pertaining to the period covered
by the Scheme along with interest has already been paid by the parties,
before the Scheme came into effect, so as to get waiver from penalty and
other proceedings?
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As no “tax dues” is
pending in such case, declaration cannot be filed under VCES. However, there
may be a case for taking a lenient view on the issue of penalties under the
provision of the Finance Act, 1994. In this regard attention is invited to
section 73 (3) and section 80 of the Finance Act, 1994.
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3 Comments
Are the SERVICES of CORPORATORS,MLAs,MPs EXEMPT from SERVICE TAX? The GOVT.is losing a LOT on the MAXIMUM SERVICES of our DEAR Rulers
ReplyDeleteTHIS IS NOT AMERICA. THIS IS INDIA....
ReplyDeleteUnder VCES(Voluntary Compliance and Encouragement Scheme) of the GOVT.can we get VOLUNTARY ASSESSMENT ORDERS AND REFUNDS due to assesses like for eg.an Assessee to SER TAX has failed to claim 75%ABATEMENT while paying SER TAX on GTA(Goods Transport Agency dues).
ReplyDeleteDoes the VICES LAW of SER TAX ENCOURAGE Assessing Officers to VOLUNTARILY give REFUNDS of EXCESS SER TAX PD in earlier years?
Or this scheme is only in favour of SARKAR?