Vces

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2013 If an assessee has not discharged part of his liability and also not filed returns, would he be eligible to claim immunity under VCES and under which clause.
Thanks in advance

CA Pallav Singhania

CA Pallav Singhania (Expert)
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30 September 2013 When the scheme was announced, it was assumed that the same would be applicable only to existing assessees in default as a phrase was used while announcing the scheme i.e. “stop filers, non filers and persons making untrue disclosure”.

However, Rule 3 of the Service Tax Voluntary Compliance Encouragement Rules 2013 states that any person who wishes to make a declaration in pursuance of this scheme and is not already registered, shall first get himself registered under Rule 4 of the Service Tax Rules 1994.

Querist : Anonymous

Querist : Anonymous (Querist)

01 October 2013 My query is like this:
Suppose an assessee has a total tax liability of Rs. 1100,out of which he has already paid Rs. 1000. Balance of Rs. 100 is now due for the period covered by VCES. Returns have also not been filed would such case be eligible for immunity from VCES? Under which rule/clause?

Querist : Anonymous

Querist : Anonymous (Querist)

01 October 2013 Would this constitute tax dues under VCES?

CA Pallav Singhania

CA Pallav Singhania (Expert)
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01 October 2013 I don't think it will cover under VCES scheme...

Querist : Anonymous

Querist : Anonymous (Querist)

01 October 2013 In the eligibility of the scheme reference has been made to S. 73A. Would this case not fall undid section

mehulmukati

mehulmukati (Expert)
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01 October 2013 Yes, the assessee can file under the VCES and claim the benefits.

However do note that under the VCES no CENVAT credit can be claimed. Hence proportionate credit claimed earlier may be disallowed and the liability may be higher to that extent.

Querist : Anonymous

Querist : Anonymous (Querist)

01 October 2013 There is no reversal of cenvat credit. In case that there would be total immunity subject to payment of balance tax representing tax dues u/s 73A. i hope my understanding is correct.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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03 August 2025 Yes, your understanding is **mostly correct**, but let me clarify the situation regarding eligibility under **VCES (Voluntary Compliance Encouragement Scheme), 2013**, especially in light of **Section 73A** and the concept of *tax dues*:

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### ✅ **Your Scenario Recap:**

* **Assessee has a total service tax liability of ₹1100.**
* **₹1000 is already paid.**
* **Balance ₹100 pertains to the period covered under VCES (1 Oct 2007 – 31 Dec 2012).**
* **Returns not filed.**
* Wants to avail **immunity** under VCES for non-payment and non-filing.

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### 🔍 **Eligibility Under VCES:**

1. **Definition of Tax Dues \[Section 106(e) of the Finance Act, 2013]:**

* *"Tax dues" means the service tax due or payable under the Finance Act, 1994 and not paid as on 1st March 2013.*

✅ Since the ₹100 is unpaid as on 01.03.2013, it qualifies as **"tax dues"**.

2. **Section 106(1) - Who Can Apply:**

* Any person who has **not paid service tax**, either in full or part, for the period covered (Oct 2007 – Dec 2012) is eligible.

✅ This applies to your case.

3. **Section 106(2)(a) - Disqualification Clause:**

* If **notice has been issued** under Section 72, 73 or 73A and the matter is pending as on 1st March 2013, then VCES cannot be opted for.

🔍 So long as **no SCN** (show cause notice) has been issued for the balance ₹100 under Section 73A, **you are eligible**.

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### ❗ Important:

* Since part of the tax was already paid, and only the **balance ₹100 is unpaid**, the assessee can file a declaration under **VCES** **only for the unpaid portion** (₹100).
* **No penalty, interest, or prosecution** will apply on this balance ₹100 under VCES, provided full payment is made within the prescribed time.

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### 🔸 **Returns not filed?**

* Not a disqualification.
* In fact, **non-filers and stop-filers** were the key targets of VCES.
* Once the declaration is made and tax is paid, **no separate penalty** is attracted for not filing returns for that period.

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### ✅ Conclusion:

* Yes, the assessee **can claim immunity** under VCES for the unpaid ₹100.
* The declaration should cover this unpaid amount.
* Immunity is granted under **Section 108** of the Finance Act, 2013.
* Just ensure **no SCN** was issued under **Section 73A** before 1st March 2013.

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Let me know if you need the declaration format or process steps for VCES filing.

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