Service Tax Voluntary Compliance Encouragement Scheme, 2013

The Finance Bill 2013 proposed introduction of a new scheme under Service Tax Law for encouraging voluntary compliances.  With the enactment of the Finance Bill 2013 wef May 13, 2013 such scheme has come into effect.  The Central Government has vide Notification 10/2013 May 5, 2013 issued Service Tax Voluntary Compliance Encouragement Rules, 2013 for notifying the form and content of application to be filed for availing this scheme and to address to other procedural issues.  The salient features of the Scheme are enumerated below

1)     Assessees who can apply

• Assessees who have not filed the service tax returns
• Assessees who have stopped filing the service tax returns
• Assessees who have not made correct disclosure of the value of services rendered / tax payable
• Assessees who have not paid service tax for the period October 2007 to December 2012
• Persons who are liable to service tax but not yet registered

2)     Assessees who cannot apply

• Assessees who have filed the returns with correct disclosure of amounts but not paid the taxes
• Assessees who have not unpaid service tax on or after January 1, 2013
• Assessess who has been issued a SCN or order under Section 72 - Best Judgement Assessment, Section 73 - Recovery of Service Tax not levied or paid or short levied or short paid or erroneously refunded and Section 73A - Remittance of excess Service Tax paid by the service provider on or before March 1, 2013
• Assessees who have any audit, enquiry, investigation pending as on March 1, 2013

3)     Procedure

• An application is required to be made to the designated authority in Form VCES - 1 on or before December 31, 2013 alongwith computation sheets
• The authority on receipt of the application shall issue an acknowledgement in Form VCES - 2 within 7 working days
• Remit atleast 50% of the tax dues by December 31, 2013 and balance by June 30, 2014
• On remittance of the entire amount, the designated authority will issue an acknowledgement for discharge of dues in Form VCES - 3
• Where the Commissioner of Central Excise has reason to believe that declarations made are incorrect, a notice can be issued in writing to pay any balance tax dues

4)     Immunity

• Interest for delayed payment of service tax
• Penalty for short payment or non payment of service tax and non filing of service tax returns
• Any other related proceedings

5)     Other important conditions

• Amount paid under this scheme would not be refundable under any circumstance
• Amount would be required to be paid in CASH - CENVAT credit cannot be utilized for remittance of tax