Service Tax - VCES - Board issues further clarifications
THE CBEC has issued some more clarifications in the Service Tax Voluntary Compliance Encouragement Scheme (VCES) which came into effect from 10.05.2013 and which if not extended will close on 31.12.2013.
No Declaration to be returned : the designated authority shall ensure that no declaration is returned. In all cases, declaration should be promptly received and duly acknowledged. Request for clarification should be dealt with promptly. Defects in the application, if any, should be explained to the declarant and possible assistance be provided in rectifying these defects. The effort must be to accept a declaration, as far as possible, and recover the arrears of tax.
Incidentally, the words employed in the VCES provisions are 'tax dues' and not 'arrears of tax'.
When inquiry, investigation, etc is pending : The concerned Commissioner may ensure that no declaration is rejected on frivolous grounds or by taking a wider interpretation of the conditions enumerated in section 106(2). If the issue or the period of inquiry, investigation or audit is identifiable from summons or any other document, the declaration in respect of such period or issue alone will be liable for rejection under the said provision.
Will usage of 'may' give discretion to the Commissioner concerned is what the coming days will reveal?
When summons are issued in a routine manner : The designated authority/ Commissioner concerned may take a view on merit, taking into account the facts and circumstances of each case as to whether the inquiry is of roving nature or whether the provisions of section 106 (2) are attracted in such cases.
For once, it is the Commissioner concerned !
Amount paid after 10.05.2013 but before declaration is filed : benefit of the Scheme would be available if such amount is declared under the Scheme subsequently, along with the remaining tax dues, if any, provided that Cenvat credit has not been utilized for payment of such amount.
Service Tax along with interest paid before the Scheme came into effect : As no "tax dues" is pending in such case, declaration cannot be filed under VCES. However, there may be a case for taking a lenient view on the issue of penalties under the provision of the Finance Act, 1994. In this regard attention is invited to section 73 (3) and section 80 of the Finance Act, 1994.
The Board letter F.No. 137/167/2006-CX.4 dated 3 rd October, 2007 mentions
- Section 73 (1A) of the Finance Act, 1994 provides for conclusion of adjudication proceeding in the cases of willful suppression/fraud/collusion if the taxpayer pays service tax liability along with interest and a penalty equal to 25% of service tax amount, within a period of one month from the date of issue of SCNs. Similarly, section 73 (3) provides conclusion of adjudication proceedings in other cases on payment of service tax and interest.
In the case of Automobile Sterling vs. CCE &ST, Noida