Appllication under SVLDRS, Service Tax

[GB Rao]

Sir,

One of my clients has disclosed his service tax liability for the period 2012-13 and applied for VCES scheme in the year 2013 for waiver of interest and penalty. As per the scheme he was required to pay 50% of the tax amount by 31.12.2013 and balance of 50% tax liability by 30.6.2014 or 31.12.2014 (with interest) and then only the scheme applies. The client has paid 50% of the tax amount by 31.12.2013 but due to financial problems he could not pay the balance 50% by 30.6.2014 or 31.12.2014(with interest). Hence his application was rejected under VCES. Now the assessee want to file the application under SVLDRS. Whether he is eligible to file the same under SVLDRS. If so under what category whether it is under litigation or arrears or voluntary disclosure. Experts opinion is sought to resolve the issue.

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Please inform whether any show cause notice had been issued by the Department after rejecting your application under VCES or prior to filing VCES declaration.

[KASTURI SETHI]

In my views, this case is neither covered under litigation nor voluntary disclosure category. Although this very amount is arrears of revenue, yet it does not conform to the definition of 'Amount in arrears' provided under Section 121(c) of SVLDRS the scheme. The party was very weak on merits. There department could recover this amount under Section 87 of the Finance Act (without issue of SCN) read with Section 110 of Finance Act, 2013. Hence doors are closed for your client. Go through the provisions of VCES and Finance Act.

Section 110 of Finance Act, 2013 (Act No.17 of 2013)

110. Tax dues declared but not paid. - Where the declarant fails to pay the tax dues, either fully or in part, as declared by him, such dues along with interest thereon shall be recovered under the provisions of Section 87 of the Chapter.

SECTION [87. Recovery of any amount due to Central Government. - Where any amount payable by a person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made thereunder is not paid, the Central Excise Officer shall proceed to recover the amount by one or more of the modes mentioned below :-

(a) the Central Excise Officer may deduct or may require any other Central Excise Officer or any officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the said Central Excise Officer or any officer of customs;

(b) (i) the Central Excise Officer may, by notice in writing, require any other person from whom money is due or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount;

 (ii) every person to whom a notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary;

 (iii) in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and all the consequences of this Chapter shall follow;

(c) the Central Excise Officer may, on an authorisation by the [Principal Commissioner of Central Excise or Commissioner of Central Excise], in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person;

[Provided that where the person (hereinafter referred to as predecessor) from whom the service tax or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining the written approval of the $[Principal Commissioner of Central Excise or Commissioner of Central Excise], for the purposes of recovering such service tax or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.]

(d) the Central Excise Officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue.]

[GB Rao]

Dear experts,

Thank u very much sirs for your timely reply.