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DELHI TAX COMPLIANCE ACHIEVEMENT SCHEME, 2013 HIGHLIGHTS & FAQs
October, 16th 2013
                 DELHI TAX COMPLIANCE ACHIEVEMENT SCHEME, 2013
                                         HIGHLIGHTS & FAQs

                                             Abbreviations used:
       (i)        DSC (or) Scheme : Delhi Tax Compliance Achievement Scheme/Voluntary VAT
                  Amnesty Scheme(VVAS)
       (ii)       DVAT Act : Delhi Value Added Tax Act, 2004
       (iii)      CST Act : Central Sales Tax Act, 1956
       (iv)       DST Act: Delhi Sales Tax Act, 1975
       (v)        WCT Act : Delhi Sales Tax on Works Contract Act, 1999
       (vi)       RTU Act: Delhi Sales Tax on Right to Use Goods Act, 2002
       (vii)      ET Act : Delhi Tax on Entry of Motor Vehicles into Local areas Act, 1994
       (viii)     VATO : Value Added Tax Officer and Sales Tax Officer
Notes - In this Paper -:
  1.           In this Paper, "Notice of Assessment/Penalty" under the DVAT Act has been considered
               and titled as "Assessment Order"; and Objection as "Appeal".
  2.           In this paper, the term "declared tax" means amount disclosed/surrendered and
               amount settled (where assessment order has been issued) under this Scheme. The term
               "declarant" means the person, who has declared tax.


                             OBJECTIVE AND SCOPE OF THE SCHEME

A. Improve Self-Compliances:
        Where assessment order has NOT been issued, the declarant (including trader,
manufacturer, contractor, builder, leasing company, etc.) shall pay only declared tax (for the period
up to 31.03.2013); and get immunity from interest, penalty and prosecution. Circumstances, such
as,-
       (i)      Dealer failed to obtain registration and pay tax;
       (ii)     Rate of tax has been wrongly charged by the selling dealer;
       (iii)    Sale has not been disclosed/under-disclosed in the DVAT / CST Act
       (iv)     Input tax credit (ITC) has wrongly been claimed by the purchasing dealer;
       (v)      Credit Note/Debit Note, including bulk discounts, have not been accounted for.
       (vi)     Central sale has been stated as local sale or vice a versa, resulting in tax deficiency;
       (vii) In case of central sales against Form C or other declaration forms, the declarant is not
             expecting central declaration forms from purchasing dealers;
       (viii) Matter is pending in assessment, audit or special audit and the assessment order has
              not been framed by VATO;
                  Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
      (ix)     Goods, paper and other accounts are seized by enforcement team, in inspection, survey,
               search or seizure, carried before 31.3.2013 or for period upto 31.03.2013, where the
               declarant expects some tax deficiency;
      (x)      TDS has not been deducted u/s 36A of the DVAT Act;

B. Disputes Settlement
             Where the assessment order has been issued by the Department, the declarant shall
             pay tax and interest as stated in such order/notice.
             The order must pertain to a period before and up to 31.3.2013, and tax has not been
             paid up to 31.8.2013.
             The assessment order might be issued under the DVAT Act, CST Act, DST Act, WC Act,
             RTU Act, or ET Act.
             The dispute may or may not be pending before any higher forum including the DVAT
             Tribunal or the High Court or the Supreme Court.
             The declarant is eligible even if no appeal has been filed against that order so far.
             The declarant will get immunity from payment of interest from the date of order till
             the date of declaration, penalty and prosecution under the Act.


                                  IMPORTANT DATES & PERIODS

12.09.2013              Enactment of section 107 of the DVAT Act empowering the Government to
                        introduce this Scheme
20.09.2013              Date of Notification of the Scheme and its coming it into force
Up to 31.03.2013 Eligibility: Period for which tax dues might be declared or paid
31.08.2013              Eligibility: Tax dues up to 31.3.2103 has not been paid or only partly paid by
                        31.08.2013
31.01.2014              Last date of payment of at least 50% of declared tax and filing of declaration
                        in Form DSC-1 under this Scheme
21.03.2014              Last date of payment of remaining amount of declared tax, if any


                                   COMPUTATION OF TAX DUES

 S.N.               Nature of Tax Dues                           Procedure of Calculation
  1          Other than Works Contractors:            Commodity wise taxable turnover in the tax
             Dealers, whether registered or         period in respect of which declaration to be made
             not, under the DVAT Act or the CST                              (X)
             Act on whom assessment order has
                                                         Rate of tax applicable for that tax period
             not been served by VATO




                                                                                                        2
                    Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

S.N.                  Nature of Tax Dues                         Procedure of Calculation
 2          Works     Contractors:  Dealers,        (a) Works contractors engaged in construction,
            whether registered or not, under            of complex, building, etc., for sale to a buyer
            the DVAT Act or the CST Act on              before construction is complete, where
            whom assessment order has not               value of land is included in total
            been served by VATO                         consideration: @1% of total consideration
                                                        (including labour & services);
                                                    (b) Other works contractors, including the
                                                        dealers stated at Sl. No. (a), who opt to
                                                        exclude the value of land as per Rule 3 of the
                                                        DVAT Rules; @ 3% of total turnover
                                                        (including value of labour and services).
 3          Dealers registered under the DVAT          As stated at Sl. No. 1 or 2, as the case may be
            Act or the CST Act on whom
            assessment order has been served
            on certain issues, but declaring tax
            dues on different issues
 4          Dealers including works contractors,     Aggregate of amount of tax and interest stated in
            registered under the DVAT Act, CST        the assessment order (exclude penalty, if any)
            Act DST Act, WC Act, RTU Act or ET                             (less)
            Act on whom assessment order has
                                                      Amount already paid by the dealer towards the
            been served
                                                                     said demand.
 5          Persons required to deduct tax at         3% of total sum paid or credited by the person
            source u/s 36A of the DVAT Act           for discharge of any liability for the execution of
            (TDS)                                    works contract or the amount actually deducted,
                                                                    whichever is greater
                                                                           (less)
                                                     Amount already deposited towards such discharge

        Manner of calculation of tax dues by the works contractor, being the builders:
        Transactions of builders may be divided in two parts: -
     (i)      Activity carried by the builder for the land owner, that is, determination of value of
              works contract for the land-owner where consideration has been received by the
              builder in the form of land : Here the value of land shall be determined as per newly
              inserted Rule 3(1A) of the DVAT Rules;
     (ii)     Activity carried on by the builder for the intended buyer (booking of property/unit
              before completion of construction by the builder): Builder has two options, namely -
              (a)      Pay tax @1% of total consideration, including the value of land, receivable/
                       received from the intended buyer; or
              (b)      Pay tax @ 3% of total turnover (including value of labour and services) as reduced
                       by the value of land determined in accordance with the recently amended Rule
                       3(3) & (4) of the DVAT Rules.
           The Government has amended Rule 3 of the DVAT Rules vide Notification No. F.3 (16)
           Fin(Rev-I)/2013-14/ds VI/785 effective from 20.09.2013. This Rule facilitates the works
           contractor to determine his taxable turnover.
        Adjustment of input tax credit from declared tax dues
                                                                                                           3
             Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
      The input tax credit cannot be adjusted against payment of tax dues under VVAS.
      Accordingly, entire tax dues under the Scheme shall be paid in cash through the normal e-
      payment method.
      Adjustment of `excess tax credit' or `carry forward amount' from declared tax dues
      There are no provisions for such adjustment and, thus, entire amount shall be paid by the
      declarant in cash. He shall not be entitled to adjust his carry forward amount as per the
      Returns, if any. For example, a declarant, who has carry forward amount of Rs. 10 lacs as
      on the date of declaration, declares the amount of tax dues of Rs.12 lacs under this
      Scheme. In such a case, he shall pay entire Rs.12 lacs in cash, without adjusting the carry
      forward amount of Rs.10 lacs.


                       PROCEDURE OF MAKING DECLARATION

1.      Compute the amount of tax dues in accordance with preceding Paras;
2.      If not registered under the DVAT Act (either as a dealer with TIN allotment or as a TDS
        deductor with TAN allotment), obtain registration. Also pay tax and file returns for the
        period after 1.4.2013 along with the declaration in DSC-1;
3.      Where declaration is made in relation to the tax dues against which objection/appeal/
        revision is pending before the higher forum, then-
      i.    all statutory appeals/revisions pending before quasi-judicial forums up to the stage of
            Tribunal shall be deemed to have been withdrawn once the Scheme is opted for;
      ii.   all matters pending in the High Court and Supreme Court shall be withdrawn by the
            declarant, and the declarant shall submit the copy of the application filed before the
            Court for withdrawal along with Form DSC-1;
4.      Fill the declaration in Form DSC-1 on the web-site of the Department;
5.      Pay at least 50% of amount of declared tax dues through Challan online. It may be
        noted that declarant may pay even the entire amount of tax dues at this stage;
6.      File hard copy of Form DSC-1 along with Challan to the designated authority on or
        before 31.1.2014;
7.      The designated authority shall suo-moto issue the acknowledgement in Form DSC-2
        within a period of 15 working days from the date of receipt of the declaration. If it is not
        received, then designated authority may be contacted;
8.      Pay remaining (unpaid) amount of tax dues through Challan online on or before the
        21.3.2014;
9.      Submit proof of such payment along with a copy of acknowledgement in DSC-2 (already
        received at Step No. 7) to the designated authority;
10.     Obtain Form DSC-3 from the designated authority: On furnishing the details of full
        payment of declared tax dues, the designated authority shall issue an acknowledgement
        of discharge of such dues within 15 days in Form DSC-3;
11.     A declaration made under this Scheme shall become conclusive upon issuance of Form
        DSC-3 by the designated authority.
12.     Amount paid under this Scheme will not be refunded under any circumstances;



                                                                                                  4
            Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
 13.   If fails to pay the tax dues, either fully or in part, after making declaration, such balance
       dues along with interest thereon shall be recovered under the provisions of DVAT Act.


                          IMMUNITIES UNDER THE SCHEME

A. Immunities, where assessment order has NOT been issued:
       Immunity from interest in relation to declared tax
       Immunity from penalty in relation to declared tax
       Immunity from prosecution
       Immunity from any other proceedings in relation to declared tax
       If not already registered under the Act:-
       ­   Immunity from penalty of late registration
       ­   Immunity from interest for late payment of tax for the period after 1.4.2013
       ­   Immunity for late filing of returns for the period after 1.4.2013
       A declaration made under this Scheme shall become conclusive upon issuance of Form
       DSC-3, and no matter shall be reopened/reassessed/reviewed thereafter in any
       proceedings under this Scheme or the Act before any Authority or Court relating to the
       period covered by such declaration to the extent of tax dues declared by the declarant;
       The information gathered vide a declaration under the Scheme shall be kept
       confidential, and shall not be used except under the Scheme and the same shall not be
       shared with any other person / government department / agency.

B. Immunities, where assessment order has been issued:
       Immunity from interest in relation to declared tax for the period after issuance of
       assessment order till the date of declaration
       Immunity from prosecution
       Immunity from penalty or any other proceedings in relation to declared tax

C. No Immunities under this Scheme:
       Interest stated in the assessment order
       Interest and penalty not related to declared tax
       Penalty which has no relation to tax deficiency. For example, where penalty has been
       imposed for late filing of Returns or other documents or for non-maintenance of stock
       records, etc, such cases would not be covered within the scope of VVAS.




                                                                                                  5
              Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs




                                    FALSE DECLARATION
         Where the Commissioner has reasons to believe that the declaration was false in material
particular, he may serve notice on the declarant, within one year from the date of declaration, in
respect of such declaration. He may require the declarant to show cause why he should not be
required to pay the tax dues unpaid or short-paid as per provisions of the Scheme.
        If the Commissioner is satisfied that the declaration made by the declarant was
substantially false, then benefit of this Scheme shall not available to the declarant. Such declarant
may be proceeded u/s 89(2) of the Act for furnishing of false declaration.


                                       MISCELLANEOUS

DSC/VVAS introduced by the Delhi Government is certainly an innovative and futuristic Scheme. It
would increase the number-base of the dealers registered with the DVAT Department; and help in
reducing existing disputes/litigations. Inspite of few issues already discussed, it is a welcome move.

Disclaimer:
This paper is an attempt to answer the frequent queries in a simple language. However, for authentic
legal interpretation please refer to the scheme Notified vide No. F.3(16)Fin(Rev-I)/2013-14/ds VI/786
                                            dated 20.09.2013




                                                                                                    6
           Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs

                         FREQUENTLY ASKED QUESTIONS


Q1.   What is the procedure for evaluating the amount to be paid wherein
      enforcement survey/seizure of goods/ papers have been made or where the
      notice of audit has been issued?

      If the dealer wants the estimated tax dues to be evaluated he may contact the
      helpdesk      under    supervision    of    Sh.    C.    Arvind,   Additional
      Commissioner (Trade & Taxes). Tel. No. 011-23705434; email:
      actt.amnesty.scheme@gmail.com

Q2.   Since dealers can declare under the VVAS upto 31st January, 2014, whether assessment /
      audit / special audit / objection/ appeal / recovery proceedings of the Department will
      continue during the period of VVAS i.e. upto 31.01.2014 ?

      Yes. There is no guarantee that the dealer will opt for VVAS and hence, the Department
      will continue with assessment / audit / special audit / objection/ appeal / recovery
      proceedings in the normal course and if the proceedings all completed then the dealer
      will need to pay the assessed tax with interest. Hence, it is in the interest of the dealer
      to declare and avail the benefit under VVAS at the earliest and in any case on or before
      31.01.2014.


Q3.   If a dealer has defaulted in filing return and has paid tax late what will be the
      procedure for applying under Amnesty Scheme and return filing?

      The dealer shall file online return as per the normal procedure and apply in
      DSC1 separately for availing waiver of interest and penalty relating to the tax
      deficiency only. The dealer shall, however, pay tax first, along with proof of the
      same, to claim the benefit under Amnesty scheme.


Q4.   If the notice of assessment has been issued and the dealer is not disputing the
      tax and interest and has already paid the same what would be the procedure for
      claiming benefit of waiver of penalty under Amnesty Scheme?

      The dealer can file DSC-1, along with proof of payment of tax and interest, to
      avail the benefit.

Q5.   Can VVAS be applied for part of the assessment order/notice of assessment?

      No. Under VVAS, the dealer would be required to pay the entire assessed tax and
      interest.




                                                                                               7
              Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
Q6.    Where objection or Appeal has been partly allowed and case has been remanded, what
       would be the procedure for VVAS?

       The dealer will have to get the remanded case assessed and then avail benefit under the
       Scheme on the basis of revised order. He may contact the concerned Zonal Additional/
       Joint Commissioner to get the remanded order passed at the earliest.

Q7.    Where tax and interest have been admitted, and paid; however, penalty is under
       challenge: Can VVAS be applied for amount of penalty in relation to such tax? If yes,
       how DSC-1 to be filed since nothing would be payable?

       Yes, please refer answer to Q4.

Q8.    Where amount of tax and interest is Rs. 10,000/- and penalty is Rs. 5,000/-. The dealer
       has already paid Rs.12,000/-. How would DSC-1 be filled since there is excess payment
       of Rs.2,000/-?

       The penalty paid/ partly paid prior to the date of notification of the Scheme will not be
       allowed to be adjusted. The amnesty benefit would be available only for the balance of
       penalty.

Q9.    Appeal filed before the High Court and Supreme Court cannot be withdrawn unless DSC-
       3 is issued. And it would not be possible to withdraw appeal before acceptance of
       VVAS. Can revised guidelines be issued in this regard?

       After the declarant dealer has paid the full tax and interest, as applicable, under the
       VVAS, the Department will issue a letter of intent of issuing DSC-3. After dealer files
       copy of application of withdrawal of Court case, the Department will issue DSC-3.
       However, this DSC-3 will get confirmed only when the case is finally withdrawn.

Q10.   Whether period of turnover, to which tax dues relates, would be disclosed in DSC-1 by
       the declarant?

       Yes; so that the dealer can be given the benefit of declaration for that period.

Q11.   The Builder, if opts to pay tax @3%, would claim deduction for land from GTO. Will he
       be required to furnish year wise computation of turnover along with DSC-1?

       Yes.

Q12.   Whether a dealer who was ordered to get Special Audit carried out under Section 58A of
       the DVAT Act can avail the benefit of VVAS on completion of Special Audit? If yes, what
       are the benefits?

       Yes. If a dealer opts for VVAS after the completion of Special Audit but before
       completion of default assessment under Section 32 then he is eligible for waiver of
       interest and penalty. If such dealer opts for VVAS after the default assessment under
       Section 32 then he is eligible for waiver of only penalty. Hence, it is in the interest of the
       dealer to opt for VVAS immediately after the completion of Special Audit.




                                                                                                   8
            Highlights of Delhi Tax Compliance Achievement Scheme, 2013 & FAQs
Q13.   A contractee opts for VVAS and pays tax of 3% after obtaining registration. He is not
       required to file TDS return for the period upto 31.03.2013. His immediate contractor has
       also not filed his return.
       -   Since the language of explanation to clause 3(5) is not clear, whether contractor
           would get immunity from payment of tax, apart from interest and penalty?
       -   What would be the procedure to disclose the name of the contractor by the
           contractee, so that contractor could get immunity from tax, etc.?


       Yes. Intention of the Government is to avoid double taxation, which has clearly been
       stated in the explanation. Therefore, if one of the parties, either contractee or
       contractor, avails for the Scheme and pays 3% tax, then the other party shall get
       immunity from payment of tax, interest and penalty to the extent of turnover declared
       for particular contract/ part of contract by the declarant.
       Where tax has been paid by the contractee, then to avail such immunity by the
       contractor, the contractee shall file the TDS return as per the provisions of the DVAT Act
       & Rules, wherein the name and address of the contractor shall be given.




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