Clarification On VCES Scheme
Circular No.174/9/2013 – ST
Date: 21st November, 2013
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.
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Issue
raised
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Clarification
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1
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An
instance was brought to notice wherein a declaration was returned probably on
the ground that it was incomplete.
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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.
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2
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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 alonewill
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.
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3
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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.
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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.
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4
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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
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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.
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5
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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?
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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.
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Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001
Mobile:- 8130711885, 9873082769
Website: www.caaga.co.in
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