SERVICE TAX VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME, 2013

To widen the revenue base from indirect tax collections, the finance ministry has implemented a one-time amnesty scheme for service tax defaulters to pay their dues without any penalty or late payment charges. The Voluntary Compliance Encouragement Scheme (VCES), which came into force after the passage of the Finance Bill on May 10, can be availed by a service tax defaulter by the year end. Such a scheme has been first time introduced by finance minister P. Chidambaram while presenting the budget for 2013-14 as there are 17 lakhs registered assesses under the service tax but only 7 lakhs were filing returns. Hence one-time Voluntary Compliance Encouragement Scheme has been introduced.

This scheme is for all those assessees who have neither paid the service tax, neither filed any return nor have been served any notice or order. The defaulters may declare their tax liabilities, including the cess charges, for a period between October 1, 2007 and December 31, 2012 and pay it to the government after making a truthful declaration, thereby avoiding penalty, interest or any other penal proceedings.

To encourage voluntary compliance by defaulters, the ministry has also decided to “reject” any enquiry or investigation against an evader, if he comes forward to make truthful declaration.

To avail the benefits mentioned, an assessee is required to deposit at least 50% of the declared dues by December 31, 2013 and the remaining portion of tax dues by June 30, 2014 without any interest. Further, where the declarant fails to pay said tax dues or part thereof on or before the said date, he is required to pay the same on or before December 31, 2014 along with interest thereon, to be calculated from July 1, 2014.Any service tax which becomes due or payable for the month of January, 2013 and subsequent months shall be payable by an assessee with interest.

Tax dues under the VCES need to be paid in cash since no CENVAT Credit can be utilized for such payment.

The benefits under the scheme are available to:

• A person to whom no notice or order of determination of tax dues has been raised or issued   before March 1, 2013;

• A person who has not disclosed his true service tax liability,

• A person against whom, no inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid or no audit has been initiated, and such inquiry, investigation or audit is not pending as on March 1, 2013.

VCES would grant immunity from penalty under the service tax laws. Also, service tax assessees who have collected service tax but not deposited the same with the Government can opt to avail the benefit of VCES.

Forms and manner of declaration, acknowledgement of such declaration along with issuing acknowledgement of discharge of tax dues have also been prescribed.

The limited scope of the scheme may not resolve the disputes pertaining to demand of service tax by the authorities that have been pending for long.

This Article has been compiled by student of student of ICAI Tarveen Kaur. She can be reached at tarveen.11@gmail.com

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