The Finance Act, 2013 has provided “Amnesty Scheme for Non Filers and Stop Filers”. Notification No. 10/2013 dated 13th May 2013 brings into action the proposed scheme and notified Service Tax Voluntary Compliance Engagement Rules, 2013. The purpose of this scheme is to encourage voluntary compliance and broaden the tax base. The scheme will be applicable on service tax dues from October 1, 2007 to December 31, 2012.
The salient features of the scheme and its benefit are given below:
- Who are eligible to take the benefit of the scheme ?
- Who cannot take the benefit of the scheme?
- What is the procedure for availing the scheme?
- What is the benefit of availing the scheme?
1. Who are eligible to avail the benefit of scheme?
The following persons can take the benefit of this scheme
- Stop filers
- Non Filers
- Non registrants
- Service providers who have not disclosed there full liability in the return filed by them.
2. Who are not eligible for scheme?
- Person against whom order of determination u/s 72, 73 or 73A has been issued before 1stMarch, 2013.
- Person who have filed the return u/s 70 and disclosed his true liability but has not paid the amount of service tax appropriately.
- Person to whom notice or order of determination has been issued in respect of any period on any issue i.e. if a person had already been caught by the department earlier on any issue then he is not eligible to file the declaration.
- Person on whom any inquiry or investigation in respect of service tax not levied, not paid or short levied or short paid has been initiated and such inquiry, investigation or audit is pending as on 1st March, 2013.
The CBEC has issued a circular no. 169/4/2013 – ST dated 13th May 2013 which clarifies that the provisions of section 106(2)(a)(iii) shall be attracted only in such cases where accounts, documents or other evidences are requisitioned by the authorized officer from the declarant under the authority and inquiry so initiated is pending as on 1st March 2013. No other communication from the department would attract the provisions of section 106(2)(a)(iii) and thus would not lead to rejection of the declaration.
3. What is the procedure for availing the scheme?
Step 1: If the defaulter is not registered, then he is first required to get himself registered and then apply for this scheme.
Step 2: After registration, defaulter shall make a declaration (Sec 97) in Form VCES – 1.
Step 3: On receipt of VCES the designated authority will issue acknowledgement of declaration in form VCES – 2. This acknowledgment shall be issued within 7 days from the receipt of declaration.
Step 4: The defaulter can pay his tax dues without interest and penalty into installments. The defaulter is required to pay 50% of tax dues by 31st, December, 2013 and rest 50% by 30thJune, 2014.
Step 5: On full payment of taxes, the designated authority will issue acknowledgement of discharge (Sub section (7) of section 97) in VCES – 3. VCES – 3 shall be issued with 7 working days from the date of furnishing of details of tax dues in full along with interest.
4. What is the benefit of availing the scheme?
- The declarant upon payment of amount in default shall get immunity from – interest, penalty, any other proceedings under Service Tax.
- On issuance of acknowledgement of discharge no matter shall be reopened thereafter in any proceedings before any authority or court relating to the period covered by such declaration, subjected to the provisions of Section 101-Failure to make true declaration.
However there is no refund of amount paid under this scheme. Where the declarant fails to pay the tax dues, either fully or in part, as declared by him, such dues along with interest thereon shall be recovered under the provisions of section 87 of the Chapter.
Thus the Scheme is beneficial to the Service Tax Assessees and defaulters who are not issued any order of determination before 1st March 2013 in respect of their tax dues for the period beginning with 1st October 2007 and ending with 31st December 2012 under section 72, 73 and 73A of the Act. On the contrary this scheme is disadvantageous for the Service Tax Assesses who have timely discharged their dues.