Service Tax_VCES

An Overview of the

Voluntary Compliance Encouragement Scheme (VCES)

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What Happens When you Fail to What Happens When you Fail to Pay your Service Tax Pay your Service Tax

Recovery of Service Tax is governed by section 73(1) of the Recovery of Service Tax is governed by section 73(1) of the FinanceFinance

Act,1994.Act,1994.On Service Tax beingOn Service Tax being Not LeviedNot Levied Levied Not PaidLevied Not Paid Short LeviedShort Levied Short PaidShort PaidRelevant provisions are applicable to recover the ServiceRelevant provisions are applicable to recover the ServiceTax along with Tax along with Interest on Account of DelayInterest on Account of Delay Penalties for : Fraud/Collusion/Misrepresentation of Penalties for : Fraud/Collusion/Misrepresentation of

Facts/Suppression of Facts/contravention of any of the Facts/Suppression of Facts/contravention of any of the provisions of this chapter or of the rules made there under with provisions of this chapter or of the rules made there under with intent to evade payment of service tax, intent to evade payment of service tax,

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Circular 967/01/2013-CX dated Circular 967/01/2013-CX dated 01.01.2013 01.01.2013

Circular 967/01/2013-CX dated 01.01.2013 brings out Circular 967/01/2013-CX dated 01.01.2013 brings out additionally,additionally,

The allowability of Recovery during pendency of stayThe allowability of Recovery during pendency of staypetitions before the Appellate Authorities being.petitions before the Appellate Authorities being. Various High Courts struck down the CircularVarious High Courts struck down the Circular Deterrents to Voluntary Compliance:Deterrents to Voluntary Compliance: Interest Interest Late Filing Fees & Delayed Registration PenaltiesLate Filing Fees & Delayed Registration Penalties Despite Section 73(3), suppression routinely alleged even Despite Section 73(3), suppression routinely alleged even

for voluntary compliancefor voluntary compliance


Offences and ProsecutionOffences and ProsecutionOffenceOffence Term of Imprisonment and Nature of Term of Imprisonment and Nature of

OffenceOffence>50 Lakhs>50 Lakhs < 50 Lakhs< 50 Lakhs Cognizable i.e in Cognizable i.e in

the Knowledge the Knowledge a. Knowingly evades the payment of a. Knowingly evades the payment of service tax.service tax.

6 months to 6 months to 3 years3 years

upto 1 yearupto 1 year Non cognizable Non cognizable and bailableand bailable

b. b. Avails and utilizes credit of taxes Avails and utilizes credit of taxes or duty without actual receipt of or duty without actual receipt of taxable service or excisable goods taxable service or excisable goods either fully or partially in violation of either fully or partially in violation of the rulesthe rules..



c. c. Maintains false books of account Maintains false books of account or fails to supply any information or or fails to supply any information or supplies false informationsupplies false information..



d. Collects any amount as service tax d. Collects any amount as service tax but fails to pay the amount so but fails to pay the amount so collected to the credit of the Central collected to the credit of the Central Government beyond a period of six Government beyond a period of six months months


CognizableCognizable

upto 1 year.upto 1 year. Non cognizable Non cognizable and bailableand bailable


What is Voluntary Compliance What is Voluntary Compliance Encouragement Scheme Encouragement Scheme

(VCES)? (VCES)? FM Chidambaram came out with this Amnesty FM Chidambaram came out with this Amnesty

scheme, serving two targets :scheme, serving two targets : Recover Service Tax efficiently and in full, as Recover Service Tax efficiently and in full, as

maximum as possiblemaximum as possible In a way that is not hostileIn a way that is not hostileEligibility:Eligibility:Persons having Tax liability between01.10.2007 to Persons having Tax liability between01.10.2007 to

31.12.2012 as on 01.01.201331.12.2012 as on 01.01.2013And not having any notice served on them, i.e. And not having any notice served on them, i.e.

Department is unaware of till date of their liability.Department is unaware of till date of their liability.


Who is not Eligible for VCES?Who is not Eligible for VCES? Assessees who haven’t paid Tax but have disclosed the Assessees who haven’t paid Tax but have disclosed the

same in their Returnssame in their Returns Tax paid before 01.01.2013 but Interest/ penalties are Tax paid before 01.01.2013 but Interest/ penalties are

unpaid.unpaid. Assessees to whom Show Cause Notice has been Issued but Assessees to whom Show Cause Notice has been Issued but

Adjudication is PendingAdjudication is Pending Tax remains unpaid on a Show Cause Notice raised for a Tax remains unpaid on a Show Cause Notice raised for a

prior period.prior period. Summons Issued/Search Conducted, Inquiry Pending/Letter Summons Issued/Search Conducted, Inquiry Pending/Letter

Compelling Production of Books of Accounts/Documents Compelling Production of Books of Accounts/Documents and/or Audit for the same initiated and in progress i.e. not and/or Audit for the same initiated and in progress i.e. not complete complete

Tax Pending for a period other than Mentioned in the Tax Pending for a period other than Mentioned in the previous Slideprevious Slide


What does VCES offer :What does VCES offer : Pay pending Service Tax for the period Pay pending Service Tax for the period

01.10.2007 to 31.12.2012 on a self –assessment 01.10.2007 to 31.12.2012 on a self –assessment basis. basis.

A Clarification in this regard being such amount A Clarification in this regard being such amount CANNOT BE ADJUSTED against CENVAT CREDIT CANNOT BE ADJUSTED against CENVAT CREDIT and has to be PAID IN CASH.and has to be PAID IN CASH.

The Cherry on the Cake being :The Cherry on the Cake being : WITHOUT INTERESTWITHOUT INTEREST WITHOUT PENALTYWITHOUT PENALTY AND THERE BEING CLOSURE OF PROCEEDINGS on AND THERE BEING CLOSURE OF PROCEEDINGS on

payment of the above mentioned Taxpayment of the above mentioned Tax


Process of Applying for VCESProcess of Applying for VCES

Obtain Registration of ServiceTax(in caseObtain Registration of ServiceTax(in case

already not obtained e.g Start ups) already not obtained e.g Start ups)

Make Application in VCSE 1Make Application in VCSE 1

Get Acknowledgement of Application in VCSE2Get Acknowledgement of Application in VCSE2

Final Discharge of Acknowledgement in VCSE3Final Discharge of Acknowledgement in VCSE3


Scheme of PaymentScheme of PaymentDUE DATEDUE DATE AMOUNT OF SERVICE TAX AMOUNT OF SERVICE TAX

PAYABLEPAYABLE

By 31..03.2013By 31..03.2013 50 % of the Tax Payable, WITHOUT 50 % of the Tax Payable, WITHOUT INTERESTINTEREST

By 30.06.2014By 30.06.2014 Balance 50% of the Tax Payable, Balance 50% of the Tax Payable, WITHOUT INTERESTWITHOUT INTEREST

By 31.12.2014By 31.12.2014 Balance unpaid, WITH INTERESTBalance unpaid, WITH INTEREST


Service Tax_VCES

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