The scheme is enacted by insertion of Chapter VI of Finance Bill, 2013 (herein referred to as “Amnesty Scheme”)
Section 94 to 104 are inserted in Finance Act, 1994 to operationalize the Scheme.
“Service Tax Voluntary Compliance Encouragement Rules, 2013” prescribes the forms and Rules for implementation of scheme (herein referred to as Amnesty Rules). Scheme comes into force from 10th May 2013 but the related rules come into force on 13th May 2013. Hence, effectively it becomes operative on 13th May 2013.
Tax amnesty is limited time opportunity for a specified group of taxpayer to pay a defined amount relating to a previous tax period/s without any fear of criminal prosecution.
On similar line, The Finance Bill, 2013 has offered an amnesty scheme to the defaulters of service tax in the name of ‘Service Tax Voluntary Compliance Encouragement Scheme, 2013’ (VCES).The Scheme to encourage voluntary compliance by a person who may not have filed the returns or paid the service tax dues for the period commencing from 1st October,2007 and ending on 31st December,2012.
TAX DUES UNDER SCHEME [Section 95(e)]:
· Service *tax due or payable for the period 1st October 2007 to 31st December 2012, or
· Amount due or payable under section 73A for above referred period, and
· Which are unpaid on 01.03.2013
*Issue 1: Service tax due- gross amount or net of Cenvat amount?
· The said Scheme is applicable to all the assessee. Individual, HUF, Partnership Firm, Body Corporate etc. all can take advantage of the scheme.
· The scheme can be availed by non-filers or stop filers.
· The scheme would apply to the Service Tax and Cess due or payable or any other amount due or payable for the period of 01.10.2007 to 31.12.2012
· Tax payable for the month of January 2013 and the subsequent period
· Adisclosed amount of Service Tax or any part thereof; shall not be eligible to avail the benefit of the said scheme assessee who has filed his ST-3 returns and disclosed his true liabilities but not paid the service tax.
· An assessee who have been served with a *notice or an order of determination in respect of any period on any issue, then such assessee cannot apply for the said scheme for same issue for any subsequent period.
· An assessee against whom an inquiry or investigation, as detailed below, is initiated respect of a service tax not levied or not paid or short paid not apply for the said scheme :
i. search of premises under section 82 of the chapter or
ii. issuance of summons under Section 14 of the Central Excise Act, 1944, as made applicable to Service Tax provisions under section 83 of the Finance Act, 1994 orRequiring production of accounts, documents or other evidence under the Chapter or the rules made there under.
iii. An assessee against who audit under section 72A has been initiated. However, CERA audit is not covered under the said scheme. Only EA 2000 audit is supposed to be considered for the same.
*In case of more than one services where the SCN is issued only for one service, Amnesty can be availed for other services. Also, if SCN for 1st service is issued only for 1/10/2007 to 31/12/2009, then amnesty scheme cannot be availed.
“Nil Returns” are not covered under the Amnesty Scheme. Since there is no unpaid liability, the assesses is not liable to pay tax.
The scheme is valid for the tax dues pertaining to period from 01.10.2007 to 31.12.2012. One can apply on or before 31stDecember, 2013.
To take registration, if not registered earlier [Rule 4 of Scheme rules]
Filing of Declaration
A person has to make a declaration of his dues which he wants to settle to designated authority (not below the rank of Assistant Commissioner) on or before the 31.12.2013 in form VCES-1(in duplicate).
(A comprehensive and detailed working for each and every service should be provided separately, the working or the calculation sheet should be provided alongwith.)
Acknowledgement by the designated authority
The designated authority shall acknowledge the declaration in such form VCES-2 within 7 working days from the receipt of the declaration.
On complete payment of declared tax dues, designated authority shall issue acknowledgement of discharge of declared dues in form VCES-3 within 7 working days from the receipt of details of payment from declarant.
Payment of 50% dues on or before 31.12.2013 and rest 50% dues on or before 30.06.2014
Once the declaration has been made, the declarant is required to deposit 50% of the tax dues so declared on or before 31.12.2013 and submit proof of such payment along with a copy of acknowledgement issued to him for declaration of tax due to the designated authority. The remaining tax dues shall be paid by the declarant on or before the 30.06.2014.
Where the declarant fails to pay said tax dues or paid thereof on or before the said date, he shall pay the same on or before the said date, he shall pay the same on or before the 31.12.2014 along with interest thereon, for the period of delay starting from the 01-07-2014
No refund of amount paid under the scheme
Any amount paid under the scheme pursuant to declaration shall not be refunded under any circumstances [Section 99]
Payment for tax dues from 01-01-2013 onwards to be made in regular course
Any service tax which become due or payable by the declarant for the month of January,2013 and subsequent month shall be paid by him in accordance with the provisions of the chapter and accordingly, interest for delay in payment thereof, shall also be payable under this chapter.
Issue of Show Cause Notice within one year of declaration
If an assessee files a false declaration under the scheme, and where the Commissioner of Central Excise has reasons to believe that the declaration made by a declarant under this Scheme is substantially false, he shall be served a Show Cause Notice under Section 73 of the Finance Act, 1994 in respect of such declaration requiring him to show cause why he should not pay the tax dues not paid or short-paid. Show Cause Notice can be issued within one year from the date of filing of declaration. Hence, interest and penalty as applicable shall be levied.
Show Cause Notice cannot be issued after the expiry of one year from the date of declaration.
If the declarant fails to pay declared tax dues(either full or in part).such dues along with interest thereon shall be recovered under normal recovery proceedings under the Act.[ Section 100]
(Notification No.10/2013-ST dated 13/05/2013)
1. Short title and commencement –
(1) These rules may be called the Service Tax Voluntary Compliance Encouragement Rules, 2013.
(2) They shall come into force on the date of its publication in the Gazette of India.
(1) In these rules, unless the context otherwise requires, -
a) “Act” means the Finance Act, 2013;
b) “Form” means the Forms annexed to these rules.
c) “Scheme” means the Service Tax Voluntary Compliance Encouragement Scheme, 2013 as specified in the Act;
(2) Words and expressions used but not defined in these rules but defined in the Scheme shall have the meanings respectively assigned to them in the Scheme.
3. Registration. –
Any person, who wishes to make a declaration under the Scheme, shall, if not already registered, take registration under rule 4 of the Service Tax Rules, 1994.
4. Form of declaration. –
The declaration under sub-section (1) of section 107of the Act, in respect of tax dues under the Scheme shall be made in Form VCES -1.
5. Form of acknowledgment of declaration. –
The designated authority on receipt of declaration shall issue an acknowledgement thereof, in Form VCES -2, within a period of seven working days from the date of receipt of the declaration.
6. Payment of tax dues.–
(1) The tax dues payable under the Scheme along with interest, if any, under section 107 of the Act shall be paid to the credit of the Central Government in the manner prescribed for the payment of service tax under the Service Tax Rules, 1994.
7. Form of acknowledgement of discharge.–
(1)The designated authority shall issue an acknowledgement of discharge under sub-section (7) of section 107 of the Act, in Form VCES-3.
(2) The acknowledgement of discharge shall be issued within a period of seven working days from the date of furnishing of details of payment of tax dues in full along with interest, if any, by the declarant.