VCES, 2013 and a recent Preventive case
WE received this mail from an exasperated Netizen -
"Sir, I am registered with the Central Excise department and paying my taxes diligently. Yesterday, officers from the Central Excise Department (Preventive) visited my office to conduct a Service Tax enquiry. By the end of the day, the Preventive party informed me that upon going through my records, their intelligence has proved right - and that is I should have paid Service Tax but which I have not been paying for the past many years and one major item was Service Tax in respect of the annual maintenance contracts of the products manufactured and sold by me. Statements were recorded and I braced myself for the worst.
I had heard about arrest provisions introduced this year and did not want to invite the ire of the officers and face imprisonment so offered to pay the Service Tax dues along with interest, penalty etc.
Incidentally, in the morning I had seen and read some advertisements in the daily newspaper issued by the Service Tax Department about Voluntary Compliance Encouragement Scheme.
When I showed them the advertisements and said that I would be more than happy to opt for this Voluntary Compliance Encouragement Scheme for the period from October 2007 to December, 2012, they said that I AM NOT ENTITLED TO DECLARE AND PAY MY DUES UNDER THIS SCHEME FOR THIS "EVASION" HAS BEEN DETECTED BY THEM.
I went through these advertisements many more times but found that there was nothing which supported the view being taken by the Preventive Officers. Now, they have threatened me with a Show Cause Notice for the five year period and also mandatory penalties and interest. I was also told to make spot payments. I said, as agreed, I would pay the entire amount along with interest etc. but within a day or two.
After they left my premises I went through the VCES, 2013 advertisements and the scheme in the Finance Act, 2013.
I found that the definition of "tax dues" given in the Finance Act, 2013, as reproduced below does not debar me from making any declaration and payment even if it is a Preventive case -
"(e) "tax dues" means the service tax due or payable under the Chapter or any other amount due or payable under section 73A thereof, for the period beginning from the 1st day of October, 2007 and ending on the 31st day of December, 2012 including a cess leviable thereon under any other Act for the time being in force, but not paid as on the 1st day of March, 2013."
Further, I am not hit by the provisions of section 106(1) or for that matter 106(2) of the Finance Act, 2013 as neither any SCN has been issued to me as on the 1 st March, 2013 nor any audit/inquiry/investigation had been initiated and which was pending as on 01 st March, 2013.
So, even if the Preventive department manages to issue a SCN in a short time from now, I would still be eligible to file the declaration, pay the dues and get the immunity.
I am sure that many assessees like me or for that matter the non-filers or stop-filers may have also faced such an uncomfortable situation recently and would like to know whether my stand is correct.
I request DDT to carry my plea in its column and seek the views of the netizens and also request the Central Board of Excise and Customs to educate me and all others on the issue."