FM rules out extension of VCES deadline

Union Finance Minister P Chidambaram on Wednesday ruled out extension of the deadline for Voluntary Compliance Encouragement Scheme (VCES), 2013 for service tax defaulters beyond December 31, 2013, at an interactive session for traders.

“The minister clearly said that the deadline for the scheme won't be extended, in response to a request by a businessman,” partner at consulting firm BMR Advisors, Mahesh Jaising, who was one of the attendees, said.

He was one of the many participants who attended a closed door, interactive session on VCES for traders, lawyers, accountants and trade body representatives here.

Another request, to reduce the quantum of first installment payable was also turned down. “The minister declined to accept our request that the first installment be reduced from 50 per cent to 40 per cent,” president of Karnataka Small Scale Industries Association, B P Shashidhar said.

The scheme stipulates that if an applicant fails to pay at least 50 per cent of the declared tax dues by December 31, 2013, he would not be eligible to avail of the benefit under the scheme.

Participants also quoted him as saying that he assured them of confidentiality of declarations made under the scheme.

The tepid response to VCES, announced in Budget 2013 by Chidambaram – has apparently irked him, since only about 9,000 defaulters have responded, yielding Rs 2,000 crore across India.

Bangalore Zone could manage to garner Rs 155.94 crore from 432 declarants till December 2, 2013, according to a note circulated at the event. The revenue secretary, Sumit Bose said that Bangalore is lagging behind other cities in disclosure.

At a similar event in August this year, the Commissioner for Customs, Central Excise & Service Tax, Sanjay Pant had said that there were approximately 1.69 lakh registered service tax assessees in Bangalore Zone, but only about 39,000 file service tax returns.
Earlier, during his introductory speech, Chidambaram said that those who are probably under the impression of a similar scheme likely to come up again in the near future are wrong. “I am afraid they are mistaken, another such scheme is not likely to come up for at least a decade,” he said.

He said that the department has rejected 107 applications declared under VCES. “A committee will be appointed after December 31, 2013 to examine them.”

His rather curt speech wherein he referred to selective “dishonesty” among assessees when it comes to paying taxes and subsequently, refusal to entertain questions beyond the ambit of the scheme, irked many trade representatives. One of them, visibly disappointed, was prompted to say, “The session was an eyewash.”