Luke warm Response to VCES?
Dr. DD Rishi, Advocate writes in,
The primary reason for the poor response to Service Tax Voluntary Compliance Encouragement Scheme 2013 is the apprehension by the prospective declarants that once they make a declaration, the Department may later misuse the provisions of Sec 111(1) of the Finance Act, 2013 to harass them. This sub-section reads as under:
"111. (1) Where the Commissioner of Central Excise has reasons to believe that the declaration made by a declarant under this Scheme was substantially false, he may, for reasons to be recorded in writing, serve notice on the declarant in respect of such declaration requiring him to show cause why he should not pay the tax dues not paid or short-paid."
The time limit for issue of show cause notice under the above provision is one year from the date of declaration. In the usual course of things, the Commissioner of Central Excise (and not the Commissioner of Service Tax..??) would ask the field officers to verify whether there is any mis-declaration so as to warrant exercise of powers under the said sub-section. The Trade perceives it to be highly improbable that the field officers would take the risk of giving a clean chit to the declarant, and would, in all probability, play safe by asking the declarant for all his records and somehow cook up something to ward off the necessity of giving such a clean chit.
Mistrust between the taxpayer and tax collector often leads to such apprehensions and these are not always based on firm grounds. But, all the same, if the Government wants the VCES to be a success, these apprehensions would have to be addressed to. There is a need for issue of clear and unambiguous guidelines laying down that the action under the said sub-section would be resorted to only when the Department has independent evidence to justify that action, and that the declarant would not be summoned in person or asked to produce his records at that stage.