Analysis of Union Budget 2017 provisions of Income Tax Service Tax Excise Duty Custom Duty with Budget Highlights Commentary Speech, Notification, News & Articles.
CA Pralhad Mandhane
Service tax was introduced for the first time in 1994 budget. It has completed 19 years of implementation. Over the period of time, almost all services (except specified negative list) are brought under Service Tax net. Though the applicability has now spread over most of the services, due to various ambiguities, interpretation issues and other reasons, various persons have not either complied with the registration requirements and /or have not paid the tax.
To bring all of them under the tax net and collect the tax dues, Hon’ble Union Minister of Finance has proposed a Service Tax Voluntary Compliance Encouragement Scheme, 2013 in Finance Budget 2013. The Scheme is applicable for the tax dues not paid for the period 1st October 2007 to 31st December 2012.
While announcing the scheme, Finance Minister has said that, out of 17,00,000 registered assessee only 7,00,000 assessee file service tax returns. In order to motivate assessee to pay service tax and file pending returns, the Hon’ble Minister has announced this scheme. As the name suggests, the scheme is prepared to encourage assessee to come forward voluntarily and pay the taxes to get immunity from imposition of interest and penalty. The Proposed scheme shall be made applicable after getting assent of the President of India to the Finance Bill 2013-14.
Who are Eligible to apply under the Scheme
If we go through the list of the persons who are eligible to apply under the scheme and who are not eligible, we can summarize that the scheme is applicable to those assessees who have not paid the tax to the government and government was not able to bring them under the scanner. All other assessees, who have either informed their liabilities or have already been undergoing departmental enquiry are not benefited from the scheme. The Applicability of scheme can be understood better from the following list by analyzing various clauses of the scheme;
1. Any assessee registered / un-registered, who has not paid tax dues for the period between October 2007 to December 2012 as on 1st March 2013 and
2. Who has not filed Service tax returns or
3. Who has not filed returns as per Service Tax provisions or
4. Who has not received Notice / Assessment order as on 1st April 2013 for point No. 2 and 3 under Section 72 of Finance Act, 1994 or
5. Who has not received notice / order as on 1st April 2013 under Section 73 of Finance Act, for not levy or paid or short levy or short payment or erroneously refund of Service Tax or
6. Who has not received notice / order as on 1st April 2013 under Section 73A of the Finance Act, for non-payment of Service tax which is collected from the customer but not paid to the government.
Who are specifically not eligible to apply under the Scheme
The person desiring to opt for the scheme needs to follow a specific procedure enumerated below;
Benefits of the Scheme
The assessee opting for the scheme shall be benefitted in two ways;
While applying for immunity under the scheme, one needs to keep in mind that;
The Scheme is a good effort by the Finance Minister to recover taxes from the tax defaulters and to bring them under tax net. However, the scheme should be extended to taxpayers who have declared the liability but could not pay the dues or cases are pending at various levels. If not, then it might result in violation of the Article 14 of the Constitution of India which gives every person the right of equality before law. It is necessary to pass right message about the intention behind this scheme to public at large. Else one may think that it is better to be dishonest than paying taxes on time.
(Author is a Chartered Accountant in Practice from Pune, Maharashtra & can be reached at firstname.lastname@example.org)