Background – Service tax is a new emerging law and there has been lack of clarity on the applicability of the service tax, among the trade, departmental officer and also among the consultants, this would have left lot of assesses not being compliant although has no intention to evade the payment of service tax. Many service providers as well as service receivers have been fearful and not happy with payment of interest and penalties on amounts not collected from the customer. In such state of affair introduction of amnesty scheme is undoubtedly a welcome move which may enable them to comply without payment of interest and penalty.
VCES ?
In Finance Act 2013 FM has announced VCES 2013 (voluntary compliance encouragement scheme) which is an open invitation to any person who is liable to pay service tax (either in the capacity of service provider or receiver) but has not been deposited the same, partially or fully to the exchequer .without any penalty and interest.
Need Of VCES
The Finance Minister in his Budget speech laid stress upon the fact that majority of the assessees are either non filers or stop filers. He also candidly admitted that the machinery is not so well equipped to go after each and every defaulter. Thus he introduced this VCES to encourage those assessees who have not filed service tax returns or stopped filling returns for one or the other reasons or those persons who have not paid Service Tax.
Applicability-(period)
A person who is laible to pay service tax but has not paid for period relating to 1 oct 2007 to 31 dec 2012 can take benefit of the scheme .
Frequently asked questions on VCES
Q1. A person not registered under service tax can apply for the scheme?
Ans – Registration under service tax is prerequisite condition for availing the scheme . So if you are not registered, first obtain the registration by applying the in Form ST 1, electronically and submitting the necessary documents. Only after obtaining the registration, you become eligible to file declaration under this scheme.
Q2. Who is eligible for the scheme?
Ans. Any person except:-
a) persons whom notice or order of determination has been received under section 72/73/73A of the chapter before 1st march 2013.
b) Person who has furnished return under section 70 and disclosed his true liability but that is unpaid (for that particular period person will become ineligible)
c) Person against whom an enquiry or investigation in respect of a service tax not levied , short levied or not paid has been initiated before 1st march 2013 or ;
d) Any audit has been initiated or pending as on 01-03-2013.
Q3. What is the meaning of the word ‘tax dues’?
Ans- . Tax dues means Service tax , and cess leviable thereon under any other Act ( for e.g. Education Cess 2% , SHED Cess 1% , R & D Cess ) or due or payable or any other amount due or payable under section 73 A for the period October -2007 to 31-Dec.-2012 but not paid as on 01-Mar-2013.
Q4. Procedure for making declaration under VCES ?
Ans – . An eligible person has to make declaration in VCES-1 (form) that should be supported by working of total tax due as stated in form VCES-1 . The declaration shall be made to the designated authority , who shall be an officer not below the Rank of Assistant Commissioner of Central Excise as notified by Commissioner of Central Excise for the purpose of this scheme. Further within 7 days of filling the declaration VCES-1 the department will issue acknowledgment in VCES-2
Q 5. Time limit for payment and declaration?
Ans . The Declaration must be filed on or before 31st December, 2013. 50 % of total dues declared in the declaration (VCES-1) filed must be paid on or before 31st December, 2013.
Balance 50% is to be paid on or before 30th June, 2014. Balance amount, if any, as on 1st July, 2014 is to be paid on or before 31st December, 2014 with 18% interest.
Q6. What is VCES-3?
Ans. After making total payment under the scheme and after getting intimation of the amount paid the declarant, the department will issue acknowledgment of discharge of liability in VCES 3 which means that the declarant has complied with all requirements and no action can be taken against him “for the matter” under Service Tax Provisions.
VCES -3 will be issued within 7 days of submission of details of “total dues” paid under the scheme.
Q7 . Can one use cenvat credit to pay tax dues as per VCES -1 ? Can refund of excess amount is available ?
Ans- No , it has to paid in cash . The amount once declared and paid to department can’t be refunded.
Article by –
Anubhav Jain (CA Final),
Kota (Rajasthan),
Email- anubhav5jain@gmail.com
What is the proper method to file income tax returns of Partnership firm for the FY 2011-2012 & 2012-2013?
Is it Electronically or Physically?
If the income for the FY 2011-2012 is below the 500000 then it is mandatory to file the return or not?
i am registered in ST-2 since 2004 but i have not filed any return and tax also. my business in small town & in current situation i need to cancel my Regi . No. should i get the benefit of this scheme
thanx….Anubhav
Whether service tax paid under vces allowed as an expense under income tax act??
Dear Anubhav Jain
You have made a good attempt to explain the salient features of the VCES. But the caption ought to have been a gift for tax dodgers and not for the honest payers. Those who have been complying with the law of the land are the ones who are put paid up for their honesty.