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Circular No.174/9/2013 – ST
F.No.B1/19/2013-TRU
Government
of India
Ministry
of Finance
Department
of Revenue
Central
Board of Excise & Customs
(Tax
Research Unit)
North
Block
New
Delhi, 25th November, 2013
To,
Chief Commissioners of
Central Excise and Customs (All),
Director General
(Service Tax), Director General (Central Excise Intelligence), Director
General (Audit),
Commissioners of Service
Tax (All)
Commissioners of Central
Excise (All),
Commissioners
of Central Excise and Customs (All).
Madam/Sir,
Sub: The Service Tax Voluntary Compliance
Encouragement Scheme - reg.
The Service Tax Voluntary Compliance Encouragement Scheme
(VCES) has come into effect from 10.5.2013. Most of the issues raised with
reference to the Scheme have been clarified by the Board vide circular Nos.
169/4/2013-ST, dated 13.5.2013 and No. 170/5/2013-ST, dated 8.8.2013. These
clarifications have also been released in the form of FAQs.
Attention is also invited to letter F. No. 137/50/2013-ST, dated 22.8.2013 as
regards the action to be taken by the field formations for effective
implementation of the Scheme. A number of interactive sessions have also been
held at various places to ascertain and address the concerns of trade on any
aspect of the Scheme.
2. In the recently held interactive sessions at Chennai,
Delhi and Mumbai, which were chaired by the Hon’ble Finance Minister, the trade
had raised certain queries and also expressed some apprehensions. Most of these
issues have already been clarified in the aforementioned circulars/FAQs.
Certain issues raised in these interactive sessions, which have not been
specifically clarified hitherto or clarified adequately, are discussed and
clarified as below.
S.No.
|
Issue raised
|
Clarification
|
1
|
An instance was brought to notice wherein a declaration
was returned probably on the ground that it was incomplete.
|
As has already been directed by the Board, vide the said
letter dated 22.8.2013 (para 2.4 of the letter),
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.
|
2
|
An apprehension was raised that
declarations are being considered for rejection under section 106 (2) of the
Finance Act, 2013, even though the “tax dues” pertain to an issue or a period
which is different from the issue or the period for which inquiry
/investigation or audit was pending as on 1.3.2013.
|
Section 106(2) prescribes four
conditions that would lead to rejection of declaration, namely,
(a) an inquiry or investigation in
respect of a service tax not levied or not paid or short-levied or short-paid
has been initiated by way of,-
(i) search of premises under section 82 of the Finance Act,1994 ;
or
(ii) issuance of summons
under section 14 of the Central Excise Act, 1944; or
(iii) requiring production of
accounts, documents or other evidence under the Finance Act, 1994 or the
rules made there under; or
(b) an audit has been
initiated,
and
such inquiry, investigation or audit was pending as on the 1st day of March,
2013.
These conditions may be construed strictly and
narrowly. 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.
Examples:
(1) If an inquiry, investigation or audit, pending as on 1.3.2013 was being carried out for the
period from 2008-2011, benefit of VCES would be eligible in respect of ‘tax
dues’ for the year 2012, i.e., period not covered by the inquiry,
investigation or audit.
(2) If an inquiry or investigation, pending as on 1.3.2013 was in respect
of a specific issue, say renting of immovable property, benefit of VCES would
be eligible in respect of ‘tax dues’ concerning any other issue in respect of
which no inquiry or investigation was pending as on 1.3.2013.
It is also reiterated that the designated authority, if he has reasons to
believe that the declaration is covered by section 106(2), shall give a
notice of intention to reject the declaration within 30 days of the date of
filing of the declaration stating such reasons to reject the declaration.
Commissioners should ensure that this time line is followed scrupulously.
|
3
|
Whether benefit of VCES would be
available in cases where documents like balance sheet, profit and loss
account etc. are called for by department in the inquiries of roving nature,
while quoting authority of section 14 of the Central Excise Act 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.
|
4
|
Whether the benefit of the Scheme
shall be admissible in respect of any amount covered under the definition of
‘taxes dues’, as defined in the Scheme, if paid by an assesses after the date
of the Scheme coming into effect, (i.e., 10.5.2013), but before a declaration
is filed
|
Yes, 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.
Example:
A person has tax dues of Rs 10
lakh. He makes a payment of Rs 2 lakh on 15.5.2013, without making a
declaration under VCES. He does not utilize Cenvat credit for paying this
amount. Subsequently, he makes declaration under VCES on 1.7.2013. He may
declare his tax dues as Rs 10 lakh. Rs 2 lakh paid before making the
declaration will be considered as payment under VCES.
|
5
|
Whether declaration can be made in
such case where service tax pertaining to the period covered by the Scheme
along with interest has already been paid by the parties, before the Scheme
came into effect, so as to get waiver from penalty and other proceedings?
|
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.
|
3. Trade
Notice/Public Notice may be issued to the field formations and tax payers.
Please acknowledge receipt of this Circular. Hindi version follows.
Yours sincerely,
(S. Jayaprahasam)
Technical Officer,
TRU
Tel: 011-2309 2037
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