VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME, 2013 (Part – II)

[Dr. Sanjiv Agarwal]

Who cannot seek benefit under VCES, 2013

Though VCES, 2013 is a beneficial scheme from assessee's point of view, it prohibits certain categories of assessees for availing the same. VCES, 2013 cannot be availed –

• in respect of tax dues for which any notice has already been issued prior to 1^st March, 2013.
• in respect of tax dues for which Service Tax had already been determined before 1^st March, 2013.
• by those who have already filed the return of Service Tax but tax dues are outstanding.
• by those to whom a notice / order of determination of tax has been issued for any period between October, 2007 and December, 2012, on the same issue for any subsequent period.
• by those against whom any inquiry or investigation has been initiated or is pending by way of search, issuance of summons or requiring production of books etc and is pending as on 1^st March, 2013.
• by those in respect of whom an audit has been initiated and is pending as on 1^st March, 2013.

If any person makes a declaration under the scheme, despite aforementioned disqualifications, such a declaration is liable to be rejected.

Salient Features of Voluntary Compliance Encouragement Scheme, 2013 (VCES) -2013

—  Introduced by Chapter VI (Clause 94-104 of Finance Bill, 2013)

—  Only a one time scheme

—  Applicable to Stop filers / non-filers

—  Hope to collect reasonable money

—  Action & consequences

-        Truthful declaration of service tax dues service 1.10.2007 upto 31.12.2012 by defaulter as on 1.03.2013

-        Payment of due tax in 1 or 2 installments

-        Interest , penalties and other consequences waived

—  Not applicable to period before 1.10.2007 or after 31.12.2012

—  Not applicable to cases involved search, audit, investigation, SCN or summon issued cases as on 1.03. 2013

—  At least half of tax to be paid before, 31^st December, 2013

—  Balance to be paid  by

-        30^th June, 2014 without interest

-        31^st December 2014 with interest w.e.f. 1.07.2014

—  Dues for period after 31^st December, 2012 to be settled as per present Law

—  No refund  allowed for amount paid under VCES

—  Tax dues declared but not paid – to be recovered as per Law

—  False declaration to be rejected - reason to believe, notice to be served

—  No action after one year from date of declaration

—  Once acknowledgement is issued  - no reopening permissible

VCES Rules

Vide Notification No 10/2013-ST dated 13.5.2013, Service Tax Voluntary Compliance Encouragement Rules, 2013 have been notified to give effect to VCES, 2013.  It prescribes rules and forms to implement the scheme.

Following rules are relevant-

Rule   3          Registration

Rule   4          Form of declaration

Rule   5          Form of acknowledgement of declaration

Rule   6          Payment of tax dues

Rule   7          Form of acknowledgement of discharge

Following forms have been prescribed-

Form VCES 1           Declaration u/r 4

Form VCES 2           Acknowledgement of declaration u/r 5

Form VCES-3           Acknowledgment of discharge u/r 7.

Form VCES 1

(i)    Declaration under VCES-2013 shall be made by assessee in Form VCES 1

(ii)   Declaration is in duplicate and is of tax dues

(iii)   VCES 1 is in two parts- declaration and verification duly signed and dated by the declarant.

(iv)   VCES 1 declaration shall contain the following particulars/ information -

• Name & address of declarant
• Telephone No & email id
• Service Tax Code No.
• Details of tax dues (Service tax, education cess, secondary & higher education cess, amount u/s 73A)

(v)    Calculation sheet for tax dues should be furnished tax return period wise and service wise.

(vi)   Declaration is alongwith a verification, inter alia, to the effect that -

• Information is correct and complete
• No inquiry, investigation or audit is pending as on 1 March, 2013.

(vii)  VCES 1 is to be submitted to the concerned Central Excise Officer designated as the designated authority

(viii) Declarant should obtain an acknowledgment from the designated authority in Form VCES 2

Form VCES 2

(i)   Acknowledgment of declaration is issued in Form VCES 2.

(ii)  To be issued by designated authority within 7 working days from date of receipt of declaration.

(iii)  VCES 2 to contain declaration number and date, name & address of declarant, STC Number, tax dues declared and schedule for payment of dues.

(iv)  Form VCES 2 shall be issued under signature and seal of the designated authority.

(v)   VCES 2 is issued on the basis of declaration furnished and it does not certify the correctness made nor does it certify payment of any tax dues.

(vi)   Amount remaining unpaid as on 1.1.2015 shall be recoverable u/s 87 of the Finance Act, 1994.

Form VCES-3

(i)   An acknowledgement of discharge is to be issued in Form VCES-3.

(ii)  Designated authority (officer not below the rank of Assistant Commissioner) shall issue Form VCES-3.

(iii)  To be issued within 7 working days from the date of furnishing of details of payment of tax dues in full with interest.

(iv)  VCES-3 is issued to acknowledge that tax dues declared have been paid, in respect of declaration so made.

(v)   VCES-3 shall be issued only upon full payment of tax dues alongwith interest, as declared.

(vi)  It shall bear a number and date.

(vii) It shall contain particulars such as declaration number and date, name & address of declarant, STC number, tax dues declared, payment of dues particulars, interest paid, challan details etc.

(viii) VCES-3 shall be issued under signature and seal of designated authority.

CBEC Clarifications

CBEC has, vide Circular No 169/4/2013-ST dated 13.5.2013 clarified on certain issues relating to VCES-2013, which has been notified vide the Service Tax Voluntary Compliance Encouragement Rules, 2013. It has been clarified that -

(a)  Any person who has tax dues to declare can make a declaration as per VCES.

(b)  Where the person does not have a service tax registration, registration will be required before making declaration under VCES.

(c)  Besides interest and penalty, immunity would also be available from any other proceedings under Finance Act, 1994 or Rules made thereunder e.g, penalty or late fee for registration, non-filing of return etc.

(d)  Any tax dues could be declared under VCES subject to the provisions and Rules of VCES.

(e)  Assessee to whom show cause notice (SCN) or an order of determination has been issued can file declaration in respect of tax dues which are not covered under such SCN or in subsequent period.

(f)   Declaration can be rejected if any inquiry or investigation is pending as on 1^st March, 2013. Such inquires etc. would be those covered by or under section 14 of Central Excise Act, 1944, section 72 of Finance Act, 1994 or Rule 5A of Service Tax Rules 1994. Only inquires or proceedings under these provisions would make the declaration liable for rejection. No other communication from the Department would lead to rejection of deceleration.