Under service tax amnesty, govt not to reopen cases in future
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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".