The scope of amnesty for service tax payers will be expanded. Service tax defaulters who were given a window to pay their arrears without questioning will now be asssured that those files will be closed and not used in future tax probes.
The government is planning the step as the scheme for voluntary disclosure scheme for service tax defaulters has seen a very poor response so far. It was announced by the government in the Budget for 2013-14.
An official source told The Indian Express that the finance ministry is considering doing away with the option of probing the defaulters who come forward to avail of the voluntary compliance encouragement scheme to pay their dues.
Only Rs 15 crore has been collected under the scheme in Delhi. In Mumbai it is even less,just Rs 3 crore.
Service Tax Voluntary Compliance Encouragement Scheme (VCES),the first such scheme for indirect taxes,was introduced by finance minister P Chidambaram to motivate stop-filers and non-filers to pay their due taxes and avoid interest,penalty and prosecution under Service Tax laws.
Although there are nearly 17 lakh registered assessees under service tax,only about 7 lakh file returns.
However,with the amnesty scheme,the government hopes to collect at least Rs 1,000 crore.
A defaulter may avail of the scheme on condition that he files a truthful declaration of service tax dues since October 2007 and makes the payment in one or two installments before prescribed dates, Chidambaram had said then.
However,not many have come forward to declare their tax liability and the Central Board for Excise and Customs suspects this could be linked to the provision that allows for reopening of cases by the commissioner.
Under the scheme,a commissioner can reopen the case till one year if he thinks the declaration is not true,which the assessees fear,will be misused by commissioners as it has a nuisance value.
The department will tweak the provision to woo defaulters who have shied away so far despite there being no penalty or interest on such disclosures, the official said adding that a clarification is likely to be issued soon.
The applicant is also likely to be given opportunity of being heard before the case is sent directly to the high court as per the extant provision.
Revenue secretary Sumit Bose had called a meeting of industry representatives including CII,Ficci,Assocham and PHD chamber to seek their views and has assured them that necessary clarifications would be issued to alleviate their concerns.
The industry has been concerned about several issues including provision of audit,and the eligibility criteria under the scheme.
The one-time scheme can be availed of till June 30,2014,by all those who havent received any notice before March 1,2013 or those who have not filed service tax return for the period in respect to which he seeks to make a disclosure. Such assessees have to pay 50 per cent of the total amount due by December 2013 while the rest of the amount by June 30,2014.
However,assessees against whom an enquiry for non-payment or short levy of service tax has been initiated by way of a search,issuance of summons or action requiring production of documents,accounts or other evidence or where an audit is pending,will not be eligible.