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?
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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.
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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)?
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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
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