Tuesday, March 4, 2014

What is the position of VCES declarations filed?

Many tax payers have opted for Service Tax Voluntary Compliance Encouragement Scheme before 31.12.2013. Now it is the turn of the Service Tax Department to take up the declarations and see whether it can be rejected.

One of the reasons for rejection is likely to be the following 

(Second proviso to Section 106(1))

Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period.

There was a doubt whether an appeal can be filed against the rejection orders.Departmental view was that against the rejection orders, no appeal can be filed.

However, the decision of High Court of Punjab and Haryana in the case of Barnala Builders & Property Consultants v. Deputy Commissioner of Central Excise & Service Tax [2013] 42 GST 550 [P&H] is in favor of the tax payers.

As per section 85 of Finance Act, 1994, against the order of Central Excise Officer below the rank of Commissioner appeal can be filed to Commissioner (Appeals).

Therefore, tax payers can file appeal to Commissioner (appeals ) within two months from the date of receipt of rejection order. Department cannot take steps to recover tax during the period of appeal.