Service Tax Voluntary Compliance Encouragement Scheme (VCES)

CA Tarannum Khatri

VCES means gift to taxpayers by finance minister. Voluntary pay your tax and get many benefits.

Period: 1^st October  2007 to 31^st  December  2012

Eligibility:

• The person who has not received notice or order of determination u/s 72, 73 or 73A on or before 1^st march 2013 is eligible under the scheme.
• If any person has filed service tax return but does not pay tax, he will be not eligible for the scheme.
• If any inquiry, investigation or audit has been initiated  and pending as on 1^st march 13,

Assesses can not avail the scheme. If it is initiated after 1^st march, he can avail the scheme.

• If any notice or order of determination has been issued for any period between October 07 to December 12, declaration cannot be made on same issue for any subsequent period. But if show cause notice has been issued prior to October  07, declaration can be made on same issue.

Payment of tax:

Up to 31^st december, 2013 : minimum 50% tax payment else not eligible for the scheme

Up to 30^th June , 2014 : balance without interest

Up to 31^st December 2014 :  balance with interest (all payments without penalty and prosecution)

Other points :

• If any person has not obtained registration under service tax, he will be required to take registration before making such declaration. He will get immunity from penalty for not having registration.
• If taxpayer has received show cause notice for particular period during October  07 to December  12, he can file declaration for period not covered by notice.
• Mere general communication for taxpayers’ business by department will not make him ineligible for scheme. If it is for inquiry, investigation or for audit which is pending as on 1^st march 13, taxpayer will be ineligible.
• If taxpayer has two units with separate service tax registration number, the eligibility for scheme will be determined separately for each unit.
• Taxpayer can make declaration for tax dues concerning an issue which is not a part of audit para.
• If any person has paid  his tax dues but has not filed  return, he is not eligible for the scheme to avoid penalty for late return filling.
• If any person has paid tax dues for part of the period of the scheme and paid other part of the tax dues under VCES  scheme, he will eligible for immunity from interest and penalty on tax dues which he has paid under scheme. Let say if any person has paid 20 lacks for the period 1^st October  07 to 31^st December  11 on 1^st jan 2013 and 25 lacks on 31^st august  2013 under VCES  scheme for the  period 1^st January  12 to 31^st December 12. He will be entitled for immunity from interest and penalty for 25 lacks which he has paid under  vces.
• If there is any mistake in declaration, Taxpayer can amend the declaration and correct it after approaching authority and submit it before 31^st December  2013.
• Declaration can be rejected after giving opportunity to be heard to taxpayer if designated authority finds declaration wrong. Taxpayer may get show cause notice for the tax dues thereafter. So it is good for taxpayer that he shows right tax liability.
• Tax under VCES  should be paid in cash.