CBEC clarifies no undertaking on dues required under VCES

Tax payer just required to state information disclosed in VCES form as true and correct

The Central Board of Excise and Customs (CBEC)) has come out with detailed clarification for the tax payers availing the amnesty scheme - the Voluntary Compliance Encouragement Scheme (VCES) of Service tax following anomalies reported in the field.

As per the clarification, the board has stated that there is no provision under the said scheme to insist on an undertaking from the tax payer that no tax dues remain unpaid after making the payments while opting for the scheme.

As far as the scheme is concerned the tax payer is just required to state the information disclosed in the VCES form as true and correct.

There is no provision for stating that no unpaid dues remain, said officials. This clarification comes amidst many instances of complains received by the board that in many places the service tax officials are insisting on such undertaking.

Further, as per the scheme, the tax payer is required to pay 50% of the total dues while opting for VCES by December 2013 and rest payment to be made by June 2014 without any interest. If the dues still remain after June 2014, then the rest of the amount will have to be paid by December 2014 with interest.

However it has been clarified that there is no bar for payment of the dues in instalments as long as they meet the deadline. The amount will not have to be paid in lump sum and this is made categorically clear to the field formation and tax payers availing the scheme, said officials,

Moreover the board is of the view that the tax officials should also not raise questions on the veracity of the dues to be paid by tax payer. In case there is gross mismatch, the commissioner could issue show because notice to the tax payer and asked to clarify the dues arrived.

Under the extant rules, the scheme can be availed by non-filers or short-filers (those have filed returns but have not paid dues or people who have not made truthful declaration of their return). There is one rider. Officials explained that even if only 700,000 assesses out of total of 1.7 million file service tax returns, the number of non-filers may be exaggerated.

This is because, even if service tax registrations are online and account for service tax payments by such parties, quite often, small enterprises shut down or change the line of business when the service tax registration is just on paper. There have been cases when tax payers have filed for cancellation of registration but the online platform has not been updated.

If the service tax payers comply with such conditions, there will be immunity from penalties and other proceedings against them. However they are required to make truthful declarations of all pending dues from October 2007 to December 31, 2012.