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Regarding The Service Tax Voluntary Compliance Encouragement Scheme-clarifications
May, 16th 2013
                                                 Circular No. 169/4 /2013 - ST
                            F. No. B1/19/2013-TRU
                                 Government of India
                                  Ministry of Finance
                               Department of Revenue
                         Central Board of Excise and Customs
                                  Tax Research Unit
                                           New Delhi, dated the 13th May, 2013
Chief Commissioners of Central Excise and Customs (All),
Director General (Service Tax), Director General (Systems),
Director General (Central Excise Intelligence), Director General (Audit),
Commissioners of Service Tax (All), Commissioners of Central Excise (All),
Commissioners of Central Excise and Customs (All)


     Sub: The Service Tax Voluntary Compliance Encouragement Scheme-
           clarifications regarding.

      The Service Tax Voluntary Compliance Encouragement Scheme (VCES) has come
into effect upon enactment of the Finance Bill 2013 on the 10th May, 2013. The Service
Tax Voluntary Compliance Encouragement Rules, 2013 has been issued to bring into
effect the Scheme. Some references have been received seeking clarification as regards
the scope and applicability of the Scheme.

2.    The issues have been examined and clarifications thereto are as follows:
  S.                Issues                               Clarification
1     Whether a person who has not Any person who has tax dues to declare can
      obtained         service      tax make a declaration in terms of the provisions of
      registration so far can make a VCES. If such person does not already have a
      declaration under VCES?           service tax registration he will be required to
                                        take    registration   before    making    such
2     Whether a declarant shall get Yes. It has been provided in VCES that, beside
      immunity from payment of late interest and penalty, immunity would also be
      fee/penalty for having not available from any other proceeding under the
      taken registration earlier or Finance Act, 1994 and Rules made thereunder.
      not filed the return or for delay
      in filing of return.
3     Whether an assessee to whom In terms of section 106 (1) of the Finance Act,
      show cause notice or order of 2013 and second proviso thereto, the tax dues in
      determination has been issued respect of which any show cause notice or order
      can file declaration in respect of determination under section 72, section 73 or
      of tax dues which are not section 73A has been issued or which pertains to
      covered by such SCN or order the same issue for the subsequent period are
      of determination?                 excluded from the ambit of the Scheme. Any
                                        other tax dues could be declared under the
                                        Scheme subject to the other provisions of the
4.    What is the scope of section      Section 106 (2) (a)(iii) of the Finance Act, 2013
      106 (2)(a)(iii)?                  provides for rejection of declaration if such
      Whether a communication           declaration is made by a person against whom
      from     department     seeking   an inquiry or investigation in respect of service
      general information from the      tax not levied or not paid or short-levied or short
      declarant would lead to           paid, has been initiated by way of requiring
      invoking of section 106 (2)       production of accounts, documents or other
      (a)(iii) for     rejection of     evidence under the chapter or the rules made
      declaration under the said        thereunder, and such inquiry or investigation is
      section?                          pending as on the 1st day of March, 2013.

                                        The relevant provisions, beside section 14 of the
                                        Central Excise Act as made applicable to service
                                        tax vide section 83 of the Finance Act,1994,
                                        under which accounts, documents or other
                                        evidences can be requisitioned by the Central
                                        Excise Officer for the purposes of inquiry or
                                        investigation, are as follows,-
                                         (i) Section 72 of the Act envisages requisition of
                                          documents and evidences by the Central Excise
                                          Officer if any person liable to pay service tax
                                          fails to furnish the return or having made a
                                          return fails to assess the tax in accordance with
                                          the provision of the Chapter or rules made
                                         (ii) Rule 5A of the Service Tax Rules, 1994
                                          prescribes for requisition of specified
                                          documents by an officer authorised by the
                                          Commissioner for the purposes specified

                                        The provision of section 106 (2)(a)(iii) shall be
                                        attracted only in such cases where accounts,
                                        documents or other evidences are requisitioned
                                        by the authorised officer from the declarant
                                        under the authority of any of the above stated
                                        statutory provisions and the inquiry so initiated
                                        against the declarant is pending as on the 1st day
                                        of 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.     Trade Notice/Public Notice may be issued to the field formations and tax payers.
Please acknowledge receipt of this Circular. Hindi version follows.
                                                                         Yours sincerely,

                                                                     (S. Jayaprahasam)
                                                                 Technical Officer, TRU
                                                                    Tel: 011-2309 2037
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