Service Tax - Arrest Vs VCES?
THE recently conferred powers of arrest and treating offences as cognizable and non-bailable appear to be put into liberal use. It was only on 17th September 2013 by Circular No. 171 that the Board issued detailed guidelines on arrest and bail under Service Tax. The detailed Circular on VCES was issued on 13.5.3013. The arrest circular seems to have received the approbation of the field staff more than the VCES Circular.
The VCES is open till 31 December 2013 and a person who opts to pay the tax under the Scheme gets immunity from all proceedings under the Act including arrest and prosecution. Should such a person who has the option of filing a declaration be arrested under the Act and put in prison by denying bail? How will he arrange funds if he is in jail and will not his credibility levels suffer badly if he is in jail?
DDT asked a senior officer, who said that just because there was an on-going amnesty scheme, he cannot close down his preventive and audit wings and if the person wanting to come under VCES was genuine, he would have rushed to the Service Tax office on 11 May 2013 instead of waiting all these months. And he justified the arrests saying that only those who clearly evaded tax of more than Rs. 50 lakhs and who had collected the tax from the clients and not deposited it with the Government were arrested - such evaders deserve no better treatment.
DDT spoke to a Commissioner of Service Tax who said that he would arrest only those who are not eligible under VCES.
The last few weeks saw quite a few arrests under Service Tax. Hyderabad II Commissionerate made two arrests within this week.
Will these arrests prompt others to rush in and opt for VCES and/or pay Service Tax? Let's wait and see.