service tax voluntary compliance encouragement scheme 2013

Report
SERVICE TAX VOLUNTARY
COMPLIANCE
ENCOURAGEMENT SCHEME 2013
CMA RAKESH BHALLA [email protected]
09779010685
CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Introduction
Genesis of the Scheme
Broad features
Eligibility Criteria
Manner of declaration
Validity of declaration
Payment of Dues
Failure to pay dues
Acknowledging the dues
Advantages
Alerts for tax payers
Silent scheme
Any questions?
INTRODUCTION
TAXING ENTRIES
140
120
103
100
95
97
2006
2007
114
116
2010
2011
106
80
80
71
58
60
49
40
24
20
4
0
1995
-20
-40
1998
2002
2003
2004
2005
2008
2009
2012
-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
The Scheme has come into force with the enactment
of the Finance Bill, 2013 i.e. May 10, 2013.
Introduced as one time measure
Introduced for defaulters/ non registrants
Aims at-Providing amnesty to tax payers
- enhancing the tax base
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
 objective- amnesty to tax
payers
 & facility for non registrants
& defaulters
 if short levy of taxes is paid
within 45 days of passing the
order- interest waived
 if paid after 45 days- interest
not waived.
 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
Amnesty to tax payers
Widening tax base
Waiver of interest &
penalty
Speedy recovery of dues
Holistic culture of safety
from prosecution etc
Less tax evasion
immunity from
prosecution
Resource expansion for
nation
Self motivation for
defaulters to pay tax
Stringent Provisions encouraging tax payers
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 asOffences 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
Present position
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)
ELIGIBILITY CRITERIA
(DETAILS)
APPLICABILE TO SERVICE
PROVIDER /s
Non/ stop filers,
Declarants of false
information
OR
73
Furnished return u/s 70 &
disclosed true liability
BUT
On whom no notice or
order of determination u/s
72
NOT APPLICABLE TO
SERVICE PROVIDER WHO
HAS
73 A
Issued before 1st March,13
disclosed amount has not
been paid
Or any notice is being
issued or order of
determination for any
period or any issue.
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)
Condition 1
Only an eligible person shall make
declaration
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
VCES 1- declaration in respect
of tax dues
Form of Acknowledgement
of declaration
VCES 2- Acknowledgement of
receipt of declaration within 7
days of declaration made
Form of Acknowledgment of
discharge
VCES 3- Acknowledgement of
discharge within a period of 7
days from the date of
furnishing details.
CLARIFICATIONS
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.
VALIDITY OF DECLARATION
After condition 4
On receipt of declaration by the eligible person the designated
authority will further verify that whether-
CONDITIONS
Inquiry/investigation
for
-Non levy
- Short levy
- Short payment
of service tax
OR
Yes
Invalid
Declaration
Satisfied
An audit has been
initiated
AND
Inquiry/investigation/
audit is pending on 1st
March,13
No
Valid
declaration
CLARIFICATIONS
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.
INQUIRY/INVESTIGATION-The inquiry or investigation would have
been initiated by way of production of accounts, documents or other
evidence.
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.
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 declaration
made 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 shortpaid.
No action shall be taken under sub-section (1) after the expiry
of one year from the date of declaration.
PAYMENT OF DUES
On or before 31st
Dec 2013
Not less than 50% of total
service tax dues declared
on or before 31/12/13
On or before 30th
June 2014
balance 50% of service tax
dues
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
On or before 31st
Dec, 2014
payment along with
interest at rate specified
u/s 75 or 73 B
Interest to be calculated for the period of delay starting from 1st
July 2014.
Dues for Jan 2013
& subsequent
months
Interst will be charged for
the delay occurred as per
the regulations of the
respective chapters.
ACKNOWLEDGING THE DUES
Declarant to Designated
Authority
- Furnishing details of
payment made
And
Copy of
acknowledgement issued
to declarant
Designated Authority to
Declarant
-Acknowledgement slip
for the payment of total
service tax dues made by
the 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.
RECOVERY OF DUES WITH INTEREST
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
SHOW CAUSE NOTICE
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.
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
CMA RAKESH BHALLA [email protected]
09779010685

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