Vces- dues paid before enactment

Whether a person, who has paid service

tax for a particular period but failed to file

return, can take the benefit of VCES

Scheme so as to avoid payment of penalty

for non- filing of return?

Under VCES a declaration can be made only in

respect of “tax dues”. A case where no tax is

pending, but return has not been filed, does not

come under the ambit of the Scheme. However,

rule 7C of the Service Tax Rules provides for waiver

of penalty in deserving cases where return has not

been filed and, in such cases, theassessee may

seek relief under rule 7C.

A person has *made part payment of his

‘tax dues’ on any issue before the scheme

was notified and makes the declaration

under VCES for the remaining part of the

tax dues. Will he be entitled to the benefit

of non-payment of interest/penalty on the

tax dues paid by him outside the VCES,

i.e., (amount paid prior to VCES)?

No. *The immunity from interest and penalty is only for “tax dues” declared under VCES.

If any “tax dues” have been paid prior to the

enactment of the scheme, any liability of interest or

penalty thereon shall be adjudicated as per the

provisions of Chapter V of the Finance Act, 1994

and paid accordingly