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Service Tax Voluntary Compliance Scheme (VCES) 2013 – PASSED ON 13/05/2013

by on May 14, 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

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18 Comments
  1. Chintan permalink

    Superb

  2. Miral permalink

    Really helpful

  3. Abrar Ahmed permalink

    If an assessee has paid some service tax for one or more quarter, but not filed any return, will this scheme is applicable ? kindly clarify

    • Dear Abrar,

      Please note that in your case, the VCES application can be filed with following reasons:

      1. Tax paid but no returns filed till date,
      2. No notice, audit or investigation is pending,

      You can take the shelter of this scheme.

      Best Wishes.

  4. Manas Kashiv permalink

    Sir,
    Are number of instalments fixed for payment of amount before the prescribed date or its only about the condition that 50% of the total amount should be paid irrespective of the number of instalments?

    • Hi Manas,

      You can make more than one payments before 31/12/13 i.e. prescribed date but I will suggest try to make one single payment of full 50% amount because it would be really easier for administration purpose.

      Best Wishes.

  5. Manas Kashiv permalink

    thanks

  6. vijay sharma permalink

    suppose i am a service provider and need to file nil returns but could not file st-3 nil returns. am i eligible to declare under vces.

    • Dear Vijay,

      Currently VCES scheme does not include cases of nil returns.

      I would request you file returns online (on ACES) without any penalty. Let the department issue a demand notice for penalty. As per law, superintendent have powers to waive penalties if you have a reasonable grounds for not filing nil returns.

      Best Wishes.

  7. At what rate Service tax to be calculated under VCES (the rate of tax has been modified twice i.e 12% to 10%, and 10% to 12%) kindly clarify.

    • Hi

      Service tax is to be calculated @rate prevailing in the respective years for which ST liability is to be calculated for VCES.

      Best Wishes.

  8. Sameer permalink

    i have a problem regarding preparing sheets. Can you elaborate how to do it. Is the ST-3 form to be filled and attached with it VCES-1, which we fill for filing return. ? And where to submit it, Online or at some office? And also i have a due of just one quarter, so it will be calculated on sheets ? Please help me out on this
    Regards
    Sameer

    • Dear Sameer,

      VCES-1 is to be submitted without ST-3 returns.

      This form is to be submitted to designated officer assigned by your jurisdictional service tax department. Please visit your service tax range and ask superintendent about designated service tax unit for VCES declaration filling.

      Best Wishes.

  9. Sameer permalink

    Thanx for guiding me, but i have still no idea how to prepare calculated sheets? can you please tell me wethere it is to be made in excel and in what format?

  10. Dear Sameer,

    First of all there is no standardisd format suggested.

    Yes you can prepare Excel sheets showing taxable receipts and service tax payable. Prepare it monthwise and yearwise. Prepare a year wise summary followed by Detailed FY wise separate work sheet.

    The idea is to back the VCES form calculation details. Remember it should match with your financial accounts and bank accounts.

    Best Wishes.

  11. What if there is service tax to be paid before Oct 2007, am i still eligible? what abvout previous dues?

    • Dear RJ,

      Not each and every ST liability can be explored by service tax department. The maximum period for extending Show cause notice can be for the period of past 5 years and not more than that.

      Hence, the period before Oct 07 can’t be subject to ST notice and hence there is no question of providing coverage of it under VCES relief.

      Best Wishes.

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