INTRODUCTION

In the Union Budget 2019-20, the Hon’ble Finance Minister announced the Sabka Vishwas-Legacy Dispute Resolution Scheme, 2019‘. The Scheme has now been notified and will be operationalized from 1st September 2019. The Scheme would continue till 31st December 2019.

CONCEPT GIVEN UNDER THE SCHEME

Government expects the Scheme to be availed by large number of taxpayers for closing their pending litigations relating to Service Tax and Central Excise cases.

The Scheme is especially tailored to free the large number of taxpayers of their pending litigation with the tax administration. Government urges the taxpayer’s to avail the benefit of SabkaVishwas – Legacy Dispute Resolution Scheme, 2019 and make a new beginning.

VARIOUS IMPORTANT CONCEPTS UNDER THE SCHEME

The scheme gives various important definitions in order to understand its framework and important concepts which are defined under the scheme areas mentioned below amount in arrears, Declarant, Order, Order in appeal, Tax dues, Relief of Tax dues etc.

ELIGIBILITY CRITERIA OF THE SCHEME

Under Section 125 of Finance Act, 2019 all the persons are eligible to file the declaration under the Scheme. However, the following is the list of exception, i.e., the following persons cannot opt for the Scheme:

1. Under 125(1)(a) who have filed an appeal before the appellate forum and such appeal has been heard finally on or before the 30th day of June, 2019;

Our View-

  • It is important to note here that appeal includes appeal filed by the department.
  • Further it meansthat once the appeal is filed and heard by the department and order is not passed then the benefit cannot be availed under this scheme.
  • However If doesn’t restrict the case where appeal is filed, hearing is done and Order is also issued on or before the prescribed date.

2. Under 125(1)(b) who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration;

  • In our view it includes all such cases where the person is convicted by order of Magistrate or Jury under the provisions of indirect tax enactment.
  • It is important to note here that mere allegation by department is not a conviction.
  • And the offences here mean which are covered only under the sphere of indirect tax enactment, not under in any other statue.
  • Further the said conviction has to be seen with respect to the matter for which the matter for which he intends to file a declaration.

3. Under 125(1)( (c) who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019;

  • It covers the cases where SCN is issued and matter is heard by the department and order is not passed then the benefit cannot be availed under this scheme.
  • However if doesn’t restrict the case where SCN is issued and matter is not heard on or before the prescribed date.

4. Under 125(1) (d) who have been issued a show cause notice under indirect tax enactment for an erroneous refund or refund;

Our View-When any SCN is issued for refund or erroneous refund in that scenario the benefits cannot be availed however when a SCN is issued for interest or penalty of refund then there is not restriction to file a declaration to avail the benefit under this scheme.

5. Under 125(1) (e) who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019;

  • It covers the cases where the person is subject to search, summon, proceedings or any other kind of investigation the amount of duty is not determined on or before the prescribed date then the declarant cannot avail this scheme.
  • However if the demand is quantified then benefits can be availed under this scheme.
  • Further if a person is subject to audit, enquiry or investigation for a particular period and he intend to file a declaration of period other that period which is not the subject matter of audit, investigation or enquiry then there is no restriction to claim benefit under this scheme.
  • This provision has to read as period wise and not the entity level.

6. Under 125(1) (f) a person making a voluntary disclosure,—

(i) after being subjected to any enquiry or investigation or audit; or

(ii) having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it;

  • This provisions is very crucial as it deals with voluntary disclosure, Where a person makes a voluntary disclosure after any enquiry or investigation or audit the benefits cannot be availed under this scheme and after filing of the returns under indirect tax enactment and where the amount of duty becomes payable but not paid.
  • However if the person is making a voluntary declaration other than the situation covered under sub-clause (i) and (ii), then there is no restriction under this provision.
  • This covers the situation where a person wish to file declaration for the tax dues voluntarily.

7. Under 125(1) (g) who have filed an application in the Settlement Commission for settlement of a case;

  • It his means once the application is filed before settlement commission with respect to Central Excise or Service tax then said person becomes ineligible to avail this scheme. However if a person files and application for settlement commission in respect of any other enactment then this restriction is not applicable
  • Further this restriction shall be applicable if the application for settlement is made for the case for which person intends to file declaration. It means even though the person has filed application before settlement commission under indirect tax enactment and he wish to file declaration for matter other than the matter before settlement commission then he can file declaration under this scheme.

8. Under 125(1) (h) persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944;

When a declaration is made under IV schedule the Central Excise Act, 1944; where a list of goods are given for which the scheme cannot be availed.

Filing of Declaration:

Further in terms of Section 125(2)a declaration under sub-section (1) shall be made in such electronic form as may be prescribed

The declaration under the scheme has to made online on the website electronically at https://cbic-gst.gov.in in Form SVLDRS-1 by the declarant, on or before the 31st December,2019.

RELIEF AVAILABLE UNDER THE SCHEME

Cases where the tax dues relate to a show cause notice or an appeal which are pending as on 30th June 2019 and cases where the tax dues are linked to an investigation or audit or an inquiry against the declarant and the amount is quantified on or before 30th June 2019.

Sr. No. Particulars Where tax payable is less than Rs.50 Lacs Where tax payable is more than Rs.50 Lacs Interest and Penalty payable
Payable Payable
1 Tax dues at SCN stage 30% 50% NIL
2 Tax dues at appeal stage 30% 50% NIL
3 Tax dues outstanding OIO/ OIA stage where appeal is not filed 40% 60% NIL
4 Tax dues which are linked to enquiry, investigation or audit–amount being quantified before 30th June 2019 30% 50% NIL
5 Tax dues at SCN stage with respect to penalties, late fees–where the amount of duty is Nil or has been paid 0% 0% NIL
6 Voluntary Disclosure 100% 100% NIL

Concluding Remarks

To avail the benefit under this scheme one has to file declaration however Section 125(1)(f)(ii) restrict to file declaration by the person having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it however there is a relief available in terms of 124(1)(c)(iii) for the said liability indicated in return filed. These two provisions are contradictory to each other and need to be addressed in time to come.

So this scheme is a welcome step for disposal of pending liquidation of Central excise and service tax mattersbut again the conditions to avail the benefits under this scheme are ambiguous which needs to be clarify to achieve the object of said scheme.

For More details you may follow below link

For SABKA VISHWAS Rules

https://taxguru.in/excise-duty/sabka-vishwas-legacy-dispute-resolution-scheme-rules-2019.html

For SABKA VISHWAS Scheme Applicability Notification

https://taxguru.in/excise-duty/sabka-vishwas-legacy-dispute-resolution-scheme-2019-applicable-w-e-f-1-9-2019.html

Adv. Rashmi Jain and CA Abhishek ChopraAbhishek Chopra is practicing in CA in the field of indirect taxation and specializes in strategy, planning, advisory and compliance in the field of Indirect tax. You may reach to us – abhishekrchopra@gmail.com

Rashmi Jain who is practicing Advocate in the corporate law provides the service in planning advisory and compliances. You may reach to us –jainrashmi1402@gmail.com

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