Service Tax Voluntary Compliance Scheme (VCES) 2013 – PASSED ON 13/05/2013
The long awaited Service Tax Voluntary Compliance Scheme (VCES) 2013 is finally passed on 13/05/2013 via Notification No. 10/2013-ST giving relief to those who have by passed the service tax law.
There are no major changes in proposal requested. The Notification 10/2013 only specifies the procedural aspects of VCES 2013.
Please refer to our detailed article on budget 2012-13 proposal of Service Tax Voluntary Compliance Scheme (VCES) 2013 at http://aviratshiksha.wordpress.com/2013/04/01/service-tax-voluntary-compliance-scheme-vces-2013/
Eligibility Criteria: The person seeking the relief is called declarant under the scheme. He is eligible for an amount due or payable for the period Oct. 2007 to Dec. 2012 but not paid as on or before 01/03/2013. The tax due amount shall be undisclosed in the sense no returns should have been filed with disclosure of his true tax liability.
If any return has been filed between the eligible period (say Oct 07 to Mar 08) and tax has been disclosed (whether paid in full or in part) then only the tax amount which is disclosed (i.e. for Oct 07 to Mar 08) is ineligible. The period for which no return has been filed (i.e. Apr 08 to Dec 12) and tax has not been disclosed shall be eligible.
Moreover, the tax due amount in respect of which no notice or an order of determination under service tax legislation should have been issued or made before 01/03/2013 to be eligible for scheme. If a notice or an order of determination has been issued on one issue for any period (say Oct 07 to Mar 08) then on the same issue the declarant cannot file declaration for that period and not even for subsequent period (i.e. Apr 08 to Dec 12). However, if the issue is not similar, the declaration can be filed for subsequent period.
Just like notice or order issued, where an inquiry or investigation or an audit has been initiated in respect of an eligible period then the declarant is not eligible to opt the scheme.
What are the catches in the VCES scheme passed?
The scheme is passed in 7 different rules and wherein Rule 1 described “Short title and commencement” whereas the Rule 2 defined certain nomenclatures.
Rule 3 – Registration
Like one is entering afresh in the service tax law, the candidate is first of all required to take online registration under Rule 4 of Service Tax Rules, 1994 with the help of ACES website. This is a pre-requisite. Those who are already registered can skip this requirement.
Rule 4 - Form of declaration
Form VCES-1 is designed to declare the tax dues under the scheme. Form needs to be submitted in duplicate (one to be retained by declarant for his own records) on or before the 31st day of December, 2013 to Assistant Commissioner as notified by the Commissioner (called the designated authority here).
Along with this form, one needs to provide calculation sheet separately attached for detailed working done. The calculation is to be presented ST returns period wise and service wise.
The form is very simple outlining points 1 to 4 for declarant’s details and point 6 for service tax dues outstanding.
Rule 5 – Acknowledgement of declaration
The respective ST authority who receive the form shall provide acknowledgement in Form VCES-2 within 7 days of receipt of VCES-1.
Rule 6 – Payment of Tax Dues
- Service Tax and interest shall be paid as per Rule 6 of Service Tax Rules, 1994.
- The tax shall be paid as follows:
(a) 1st instalment – 50% of the tax dues – on or before 31/12/13
(b) 2nd instalment – balance – on or before 30/06/14.
(c) If not paid on or before 31/12/14, shall be paid with interest after 01/07/14.
- Use of CENVAT Credit has been expressly denied.
Rule 7 – Discharge from the scheme
The VCES-3 is to be provided by the designated authority within 7 days of from the date of furnishing of details of payment of tax dues in full along with interest, if any, by the declarant.
For further information, one can also go through Circular No. 169/4 /2013 – ST dated 13/05/2013. One of the welcoming move from this Circular is to clarify that besides interest and penalty, immunity would be available from payment of late fee/ penalty for non-registration or non / delay filing of return etc.
CA GAUTAM JOSHI