service tax voluntary compliance encouragement scheme 2013 cma rakesh bhalla [email protected]...
TRANSCRIPT
SERVICE TAX VOLUNTARY COMPLIANCE
ENCOURAGEMENT SCHEME 2013
CMA RAKESH BHALLA [email protected] 09779010685
CONTENTS
1. Introduction 2. Genesis of the
Scheme3. Broad features4. Eligibility Criteria5. Manner of
declaration6. Validity of
declaration7. Payment of Dues8. Failure to pay dues 9. Acknowledging the
dues10.Advantages11. Alerts for tax payers12. Silent scheme13. Any questions?
INTRODUCTION
TAXING ENTRIES
1995 1998 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-40
-20
0
20
40
60
80
100
120
140
4
24
49
58
71
80
95 97103 106
114 116
-17
The Central Govt has been keen enough to introduce various amnesty schemes for the tax payers in the past as well as present.
But failed to curb the menace of the parallel economy especially in the case of evasion of sales tax.
Similar approach was adopted by the tax payers when Finance act 1994 was enacted introducing Service Tax Regime
Either the deptt was not fully equipped with the necessary infrastructure to strictly implement the payment regulations or the
assesses have not taken the compliance seriously.
Even with the introduction of negative list the situation was not changed rather it gave a jolt to revenue that the there are 17 lacs
assesses under service tax & only about 7 lac file returns.
The service sector contributes about 65 per cent of the gross domestic product (GDP) but the number of service tax payers is quite less.
Hence a one time measure called VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME
has been introduced
Scheme introduced in Finance Bill 2013, chapter vi
Introduced as one time measure
Aims at--Providing amnesty to tax payers- enhancing the tax base
Introduced for defaulters/ non registrants
The Scheme has come into force with the enactment of the Finance Bill, 2013 i.e. May 10, 2013.
GENESIS OF THE SCHEME
VOLUNTARY DISCLOSURE
SCHEME AMNESTY SCHEME
introduced in budget 2001 for central excise & customs
introduced in budget 2013 for service tax
objective was to dispense with SCN & adjudication proceedings
if short levy of taxes is paid within 45 days of passing the order- interest waived if paid after 45 days- interest not waived.
objective- amnesty to tax payers & facility for non registrants & defaulters
100% tax dues have to be paid in 2 installments interest & penalty waived immunity from prosecution
BROAD FEATURES
Voluntary tax declaration to Govt.
Declaration for the past period.
Clauses 94 to 104 in chapter vi
Applicable to non tax payers, non filers stop filers
Service tax dues
Covered under the scheme
-payable under sec 73 A of Finance Act 1994 including cess
- dues not paid from 1st Oct,07 to 31st Dec,12.- undisputed service tax dues as on 1st Mar,13 related to above period
ADVANTAGES
To Revenue To Tax Payer
Easy collection of tax
Widening tax base
Speedy recovery of dues
Less tax evasion
Resource expansion for nation
Amnesty to tax payers
Waiver of interest & penalty
Holistic culture of safety from prosecution etc
immunity from prosecution
Self motivation for defaulters to pay tax
The finance minister while addressing the powers under judiciary mechanism of the taxation laws in his speech has moved proposals to make some selective offences as cognizable & non bailable such as-Offences covered under these sections include evasion of service
tax,
Issuance of invoice, bill or challan without provision of taxable services,
availing or utilisation of credit of taxes or duty without actual receipt of taxable service or excisable goods
failure to pay any amount collected as service tax to the credit of central government beyond a period of six months from the date on which such payment becomes due.
in the case of an offence where the amount exceeds fifty lakh rupees, with imprisonment for a term which may extend to three years
UNDER COGNIZABLE OFFENCE-,ARREST CAN BE MADE EVEN WITHOUT WARRANT
Stringent Provisions encouraging tax payers
With the introduction of this scheme, judiciary is trying to create a holistic
culture by promoting the tax payers to pay the undeclared dues and saving
themselves from the stringent provisions of law and as a result, over
one million defaulters identified, 1,400 had filed declarations amounting to Rs
650 crore. (FM)
Present position
ELIGIBILITY CRITERIA(DETAILS)
APPLICABILE TO SERVICE PROVIDER /s
NOT APPLICABLE TO SERVICE PROVIDER
WHO HAS
On whom no notice or order of determination
u/s
Furnished return u/s 70 & disclosed true liability
Or any notice is being issued or order of determination for any period or any issue.
72 73 73 A
Issued before 1st March,13
disclosed amount has not been paid
BUTOR
Non/ stop filers,Declarants of false
information
CLARIFICATIONS
RETURN- if a person has paid service tax but return has not been filed, he cannot take the benefit of VCES so as to avoid the
payment of penalty for non filing of return.However relief under rule 7C can be obtained in deserving
cases.
SHOW CAUSE NOTICE-The tax dues could be declared for which no show cause notice has been issued subject to other
provisions of act.
INQUIRY/INVESTIGATION-Even the communications of deptt soughting information of roving nature from potential tax payer regarding business activities would not constitute
inquiry or investigation.
MANNER OF DECLARATION
An assesse can avail benefit under the Scheme by making truthful
declaration regarding tax dues to Designated Authority in specified
form.
Thereafter, an acknowledgement in form shall be issued to him within 7
working days of his declaration(DETAILS)
Only an eligible person shall make declaration
Condition 1
Condition1 2
Declaration shall be made to the designated authority in form VCES 1
in duplicate
Condition1 3
Declaration shall be made in the prescribed manner
Condition1 4
Acknowledgement of declaration by designated authority in form VCES 2.
FORMS
Form of Declaration
Form of Acknowledgement of
declaration
Form of Acknowledgment of
discharge
VCES 1- declaration in respect of tax dues
VCES 2- Acknowledgement of receipt of declaration
within 7 days of declaration made
VCES 3- Acknowledgement of discharge within a
period of 7 days from the date of furnishing details.
REGISTRATION-A person who wishes to make a declaration must obtained service tax regn number if he does not have
the same.
UTILISATION OF WRONG CENVAT CREDIT-Declaration can be made in respect of cenvat credit wrongly utilised for payment of service tax, (as service tax paid
utilising irregular credit amounts to non payment of service tax)
ACKNOWLEDGEMENT- Payment of tax dues is not linked to the issuance of an acknowledgement by the deptt. (i.e. even if the
designated authority does not issues the acknowledgement within 7 days)
REGISTRATION-Two differently registered units are two different assessees for making out declaration. The
incompetency/ ineligibility of one will not affect another.
CLARIFICATIONS
VALIDITY OF DECLARATION
On receipt of declaration by the eligible person the designated authority will further verify that whether-
After condition 4
CONDITIONS
Inquiry/investigation for-Non levy- Short levy- Short payment of service tax
An audit has been initiated
OR
AND
Inquiry/investigation/ audit is pending on 1st March,13
Satisfie
d
Yes
No
Invalid Declaratio
n
Valid declaration
INQUIRY/INVESTIGATION-If the inquiry, investigation or audit has been initiated after 01/03/13, there is no bar from
filing of declaration in such cases.
AUDIT ISSUE-Liability can be declared by the assessee , where he has been audited but only for those issues which
are not the part of audit para.
SHOW CAUSE NOTICE- Issuance of show cause notice or order of determination for any period prior to Oct,07 on an issue
would not make a person ineligible to make a declaration on the same issue for the period covered by the scheme.
INQUIRY/INVESTIGATION-The inquiry or investigation would have been initiated by way of production of accounts,
documents or other evidence.
CLARIFICATIONS
WHAT IF WRONG DECLARATION
MADE BY ASSESSEE ????
In case the mistake is discovered suo moto by the declarant himself, he may
approach the designated authority, who, after taking into account the overall
facts of the case may allow amendments to be made in the declaration, provided
that the amended declaration is furnished by declarant before the cut off
date for filing of declaration, i.e. 31/12/2013
WHAT IF FALSE DECLARATION FOUND BY DESIGNATED
AUTHORITY ???? Where the Commissioner of Central Excise has reasons to believe that the
declarationmade by a declarant under this Scheme was substantially false, he may, for reasons to be recorded in writing, serve notice on the
declarant in respect of such declaration requiring him to show cause why
he should not pay the tax dues not paid or short-paid.
No action shall be taken under sub-section (1) after the expiry of one year from the date of declaration.
PAYMENT OF DUES
Not less than 50% of total service tax dues declared on or before
31/12/13
On or before 31st Dec 2013
balance 50% of service tax dues
On or before 30th June 2014
WHAT IF ATLEAST 50% OF DECLARED AMT NOT PAID BY ASSESSEE BY
31/12/13 ????
The benefit of the scheme would not be available to such assessee.
FAILURE TO PAY DUES
payment along with interest at rate
specified u/s 75 or 73 B
On or before 31st Dec, 2014
Interst will be charged for the delay occurred as
per the regulations of the respective chapters.
Dues for Jan 2013 &
subsequent months
Interest to be calculated for the period of delay starting from 1st July 2014.
ACKNOWLEDGING THE DUES
- Furnishing details of payment made
And
Copy of acknowledgement issued to declarant
Declarant to Designated Authority
-Acknowledgement slip for the payment of total service tax dues made by the declarant
Designated Authority to Declarant
ALERTS FOR TAX PAYERS
NO REFUND
If any amount is paid/ declared wrongly in excess to the actual liability the payer will not get any refund for the said amount.
If the declared amount is not paid or short paid then recovery of the dues with interest will be as per the provisions of sec 87
On finding the short/ non payment of dues on the basis of false declaration , the CCE will serve SCN for paying such dues within 30 days of such declaration.
RECOVERY OF DUES WITH INTEREST
SHOW CAUSE NOTICE
NO APPEAL
No statutory provision for filing of appeal against the order for rejection of declaration however the amount can be adjusted against the determined liability.
SCHEME REMAINS SILENT
Cenvat credit on the excluded input service such as Rent a
Cab/ Outdoor catering services/ construction work etc for the period prior to their exclusion
i.e. before Mar 2011
ANY QUESTIONS?
CMA RAKESH BHALLA [email protected] 09779010685