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TMI BlogAn Amnesty Scheme in Service Tax – A Big loopholeX X X X Extracts X X X X X X X X Extracts X X X X ..... An Amnesty Scheme in Service Tax – A Big loophole - By: - CA Surender Gupta - Service Tax - Dated:- 2-3-2013 - - SERVICE TAX VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME, 2013 Who are eligible for benefit under this scheme? Any person who is eligible for benefit of Amnesty Scheme may make a declaration of tax dues. Such declaration shall be subject to following conditions: (1) No Satisfaction of Designated Authority (Assistant Commissioner or above in rank) would be required See Sub-section (1) of section 96 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 Section - 72 - Best judgment assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Section - 73 - Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded Section - 73A - Service Tax Collected from any person to be deposited with Central Government 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. Notes: Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, any person who is registered as service tax assesse and did not receive any notice before 1.3.2013 and did not file any return for the period for which he is going to make a declaration would make a truthful declaration and the designated authority (assistant commissioner or above in rank as the case may be) has to accept such declaration. On making declaration as per section 96, he would get immunity from Interest, Penalty and any other proceedings under the Act in full. (2) Satisfaction of Designated Authority is required. See Sub-section (2) of section 96 ( 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( i ) search of premises under section 82 of the Chapter; or ( ii ) issuance of summons under section 14 of the Central Excise Act, 1944 (1 of 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 thereunder; 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. Notes: As per the Sub-section (2), where any search took place or any notice bas been issued or an audit has been initiated, even then he can mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a declaration but the designated authority shall reject such declaration by an order and for reasons to be recorded in writing. The conditions of Sub-section (2) lead me to make the heading of above said paragraph that Satisfaction of Designated Authority is required. For an example where a notice has been issued to the person who is making declaration but designated authority fails to reject such declaration or reject the declaration without recording reasons in writing, then such rejection would be unlawful. As per section 97 , the designated authority has to acknowledge the declaration. Does it mean that instead of giving an acknowledgement, he has to reject the declaration by an order and for reasons to be recording in writi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. Since once declaration is acknowledged as per section 97, there is no further provisions to reject the same as the section 97 is subject to section 98 and section 98 is subject to 101. There is no saving to section 96(2) anywhere. In other words, lack of proper action on the part of designated authority would extend the benefit of amnesty scheme to the person to whom legislators are not intending to give any amnesty. Moreover as per section 98 a declaration made shall be final (subject to section 101) Therefore in order to avoid any litigation and anomaly, the provisions may be suitably amended to clarify the situation and provisions. Nevertheless, all declaration made in view of section 96 shall be subject to the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 101. Anyhow this scheme is boon for the defaulters. Many calls have been received from the filed that it is better to be a defaulter as law abiding people are subject to rigorous provisions of law whereas defaulters get amnesty like this time and again. - Reply By MARIAPPAN GOVINDARAJAN as = The last part of the article - "It is better to be a defaulter as law abiding people are subject to rigorous provisions of law whereas defaulters get amnesty like this time and again' is optly told. Dated: 2-3-2013 Reply By Naveed S as = The purpose of the amnesty scheme appears to be to regularise the service tax assessee, especially since service tax collection is still not so high even after the increase in number of various ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w services due to introduction of the Negative list last year. Also, the aim/intention of the Govt. is to rationalise and streamline the service tax assessees, espeically before the GST scheme is rolled out so that proper revenue can be generated in future and also to reduce new litigations before the introduction of the said GST scheme. It is also a fact that the service tax payment by service tax assessee is still not so much regularised as compared to other indirect taxes. Dated: 2-3-2013 Reply By RAJESH MANGAL AGRAWAL as = In my opinion Government should enlarge this scheme to all the taxpayers i.e. there should not be any restriction for any people. This scheme should be available to even cases pending at different level " i.e. star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting from enquiry level to different appeal level" with certain amendement in interest payment clause. In this process Govt. will receive a part of huge fund blocked in diffrrent level and the genuine tax payer also thinks that they are not cheated by the Government. Dated: 4-3-2013 Reply By saurabh rairikar as = @ca surendra gupta: Sir, the concerns pointed out by you are genuine and apt. Whenever, the government has to implement a stringent law and yet to immune the "pressure groups" (who are the primary defaulters) a pin-hole in aerated balloon is created. For malicious citizens, this scheme is a boon. GOD SAVE OTHERS . Dated: 8-3-2013 - Scholarly articles for knowledge sharing authors experts professionals Tax Manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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