The finance bill 2013 has announced the voluntary compliance scheme to be introduced to encourage voluntary compliance and broaden the tax base. However the actual rules and scheme were to be announced later. With the passing of bill on 10.05.2013, central government on 13.05.2013 has come up with the scheme and rules there under. Here is the summary of provisions of same.

Provided Legally backed by: Section 94 to 104 of Chapter VI of Finance Act, 2013.

Purpose of this scheme: To encourage voluntary compliance and broaden the tax base.

The notification no. 10/2013 dt. 13.05.2013 brings into action the proposed Amnesty Scheme, now to be called as “Voluntary Compliance Encouragement Rules, 2013″.

The disclosure  period in the scheme is from October, 2007 to December, 2012.

This scheme will enable the following person to take the benefit of this scheme:

  • Stop filers,
  • Non Filers,
  • Non registrants, &
  • Service providers who have not disclosed there full liability in the return filed by them.

However, following person are not eligible to take the benefit of this scheme:

  • Person against whom order of determination u/s72, 73 or 73A has been issued before 1stMarch, 2013.
  • Person who have filed the return u/s70 and disclosed his true liability but has not paid the amount of service tax appropriately.
  • Person who had already been caught by the department and notice or order of determination has been issued in respect of any period on any issue.

Steps or Procedure of availing the scheme:

  1. In case the person making the declaration under the scheme is not registered then he would require to get himself registered before making the declaration.
  2. After registration, defaulter shall make a declaration in Form VCES –1.
  3. On receipt of declaration the designated authority will issue an acknowledgment in Form VCES-2 within a period of 7 working days.
  4. The defaulter can pay his tax dues without interest and penalty into installments as follow:

– 50% of tax dues by 31st,December, 2013,

– rest 50% by 30thJune, 2014.

      5.   On full payment of taxes, acknowledgement of discharge in VCES –3 shall be issued with 7 working days from the date of furnishing of details of tax dues in full along with.

Benefit of availing the scheme:

  • The declarant shall get immunity from – interest, penalty, any other proceedings under Service Tax upon payment of default tax amount.
  • Issuance of VCES-3 shall prevent reopening of any matter thereafter in any proceedings before any authority or court relating to the period covered by such declaration, subjected to the Faliure to make full & true deceleration.

Section 101-Failure to make true declaration.

(1)Where the CCE has reasons to believe that the declaration made by a declarant was substantially false , he may, for reasons to be recorded in writing, serve notice on the declarant.

(2)No action shall be taken after the expiry of one year from the date of declaration. (3)The show cause notice issued under sub-section (1) shall be deemed to have been issued u/s73, or as the case may be, u/s73A of the Chapter and the provisions of the Chapter shall accordingly apply.

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Compiled by: CA Deepak Aggarwal

 Contact me @ cadkaggarwal@gmail.com

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0 responses to “Summary of Service Tax Voluntary Compliance Encouragement Rules, 2013”

  1. Nutan Dev says:

    If ST3 has not been filed but full service tax has been paid,is this scheme available for not filing of ST3.
    Since ST has been paid in full also the condition of paying 50% and balance amount later is not applicable.
    What might be the solution for avoiding penalty?

  2. CA Deepak Aggarwal says:

    Mr. Ganatra amnesty scheme is beneficial to those who have service tax liability, but has not paid the amount in past due to any reason. However in your case the defaulter is only due to stop filler of return with no tax liability. Thus defaulter can take the benefit of scheme, provided he had not come under the notice of department.

  3. Ganatra says:

    Facts :- A person got registered when basic limit was 4 lacs and stopped filing returns when the basic limit was raised to 8 lacs as was not liable. However, did not cancel the registration.
    Query :- In such case, is this amnesty available to persons who do not have any liability to pay tax but is mere defaulter for non filing of NIL returns.

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