VCES, 2013 and a frozen bank account
WE received this mail -
"I am in the construction business and am a registered service tax provider. Already our business is dull due to a host of factors. You may also be aware of the turbulent times we had to go through while challenging the imposition of service tax and the failure that finally landed at our doorstep. Apart from increase in the cost of construction of the residential flats, imposition of VAT by the State government and that too with a retrospective effect reduced our margins further. Yet, we manage to survive. In this scenario, in respect of some of the housing projects, I had neither collected nor paid Service Tax which was payable by me under the head ‘Construction of Complex Service'. The VCES, 2013 announced in the Budget 2013 came as godsend to me. I was in the process of preparing and submission of my VCES application but to my bad luck the Anti-evasion authorities swooped on my office and have booked a case. My statements were recorded and I admitted that I had not paid Service Tax but informed the officers that I would be paying the Service Tax and also showed them the VCES forms that I had intended to submit. They threatened me with arrest and said that these were not hollow warnings but they could carry it out as the Finance Act, 2013 had empowered them. The next day they informed my bankers and my accounts have been frozen. Now, I do not know what is to be done. I also do not know whether the officers are empowered to freeze the accounts without first determining the tax liability due.
My only submission is that since the VCES, 2013 scheme allows ‘evaders' like me to settle my Service tax liabilities for the period ending 31 st December, 2012 the authorities should permit me to turn over a new leaf and make the payments but then this money is lying in the frozen bank accounts. After all, if the schemes like VCES have to have any use, the service tax authorities should give us an opportunity to settle our dues for the past period at least. One more thing Sir, there is nothing in the VCES scheme which prohibits us from opting for the scheme even if a case has been booked against us now. The scheme allows us to pay our dues by 31 st December 2013 or June 2014 and without any interest.
So, the officers should in true spirit and without playing spoilsport at least permit me to make use of my bank account balance for paying the Service Tax under the VCES scheme.
For the service tax dues arising from January 2013, they can certainly proceed to invoke all the sections in the Service Tax Act but not for the prior period.
I feel that you may be hesitant in carrying my email letter in your column probably because I am a tax evader but Sir the VCES scheme is for tax evaders only."
DDT only hopes that the concerned do respond.
Meanwhile an informer asked us whether he would be denied reward if the evader chooses to opt for the VCES. He was of the strong view that evaders booked by the Department should not be allowed the benefit of VCES.