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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 13
th
May, 2013
To,
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 Ex cise (All),
Commissioners of Central Excise and Customs (All)

Madam/Sir,

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 10
th
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.
No.
Issues Clarification
1 Whether a person who has not
obtained service tax
registration so far can make a
declaration under VCES?

Any person who has tax dues to declare can
make a declaration in terms of the provisions of
VCES. If such person does not already have a
service tax registration he will be required to
take registration before making such
declaration.
2 Whether a declarant shall get
immunity from payment of late
fee/penalty for having not
taken registration earlier or
not filed the return or for delay
in filing of return.
Yes. It has been provided in VCES that, beside
interest and penalty, immunity would also be
available from any other proceeding under the
Finance Act, 1994 and Rules made thereunder.
3 Whether an assessee to whom
show cause notice or order of
determination has been issued
can file declaration in respect
of tax dues which are not
covered by such SCN or order
of determination?
In terms of section 106 (1) of the Finance Act,
2013 and second proviso thereto, the tax dues in
respect of which any show cause notice or order
of determination under section 72, section 73 or
section 73A has been issued or which pertains to
the same issue for the subsequent period are
excluded from the ambit of the Scheme. Any
other tax dues could be declared under the
Scheme subject to the other provisions of the
Scheme.

4. What is the scope of section
106 (2)(a)(iii)?
Whether a communication
from department seeking
general information from the
declarant would lead to
invoking of section 106 (2)
(a)(iii) for rejection of
declaration under the said
section?
Section 106 (2) (a)(iii) of the Finance Act, 2013
provides for rejection of declaration if such
declaration is made by a person against whom
an inquiry or investigation in respect of service
tax not levied or not paid or short-levied or short
paid, has been initiated by way of requiring
production of accounts, documents or other
evidence under the chapter or the rules made
thereunder, and such inquiry or investigation is
pending as on the 1
st
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
thereunder.
(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
therein.

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 1
st
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