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13 Dec 2013

Clarification on issues relating to Voluntary Compliance Encouragement Scheme

With reference to Service Tax Voluntary Compliance Encouragement Scheme (VCES) the Board had clarified certain matters vide F. No. B1/19/2013-TRU (Pt.) dated 11 December, 2013 which have been discussed below.

Doubts Clarifications
1 Whether an undertaking to be given by the declarant where the tax dues only for a part of the period covered under the scheme stating that he has no unpaid tax dues for the remaining period covered by the scheme? No, In terms of the scheme, a declaration of the tax dues has to be made in Form VCES-1, which includes an undertaking that the information given in the undertaking is correct & complete. Therefore, the Designated Authority should not ask for any other undertaking or declaration beyond what has been prescribed in the Scheme or rules made thereunder.
2 Whether the first tranche of 50% payable under VCES by 31.12.2013 can be paid in installments? Yes, The payment can be made in installments since the scheme has just prescribed the minimum payment of service tax of 50% by 31.12.2013. Rest of the payment can be made by 30.06.2013 without interest and any amount outstanding on 30.06.2013 shall be paid by 31.12.2014 with interest. There is no such condition that the tax dues are to be paid in lump-sum only.
3 Whether the Designated Authority can raise queries on the veracity manner of computation of tax dues by the Declarant? No, The Designated Authority may go for arithmetical check as regards the computation of tax dues, but the scheme does not envisage investigation by the designated authority into the veracity of declaration. However, if the Commissioner has reason to believe that the declaration filed by the declarant is substantially false, then only, he may, for reasons to be recorded in writing, serve notice on the declarant requiring him to show cause why he should not pay the tax dues not paid or short-paid.