It is raining discounts not just on consumer goods but also on taxes. The Finance Minister on 05th July, 2019 in her maiden budget introduced Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 in order to curb the pending litigations under the erstwhile Indirect Tax Enactments. The scheme provides relief from tax, penalty, interest, immunity from prosecution, etc., on account of pending disputes. Below mentioned is an brief insight about the scheme.
1. Clauses of Finance bill relevant to Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 (i.e. LDRS) ?
|1.||119||Short Title and commencement|
|3.||121||Application of scheme to indirect tax enactments|
|5.||123||Relief available under scheme|
|6.||124||Declaration under scheme|
|7.||125||Verification of declaration by designated committee|
|8.||126||Issue of statement by designated committee|
|9.||127||Rectification of errors|
|10.||128||Issue of discharge certificate to be conclusive of matter and time period|
|11.||129||Restrictions of scheme|
|12.||130||Removal of doubts|
|13.||131||Power to make rules|
|14.||132||Power to issue orders, instructions, etc|
|15.||133||Removal of difficulties|
|16.||134||Protection to officers|
2. Date from which the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 will be effective?
The effective date of the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 is yet to be notified.
3. Which are the enactments to which Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 applies?
LDRS covers disputes relating to Excise and Service Tax enactments. Further, it covers more than 26 other enactments such as Sugar Cess Act, Tobacco Cess Act etc.
Effectively disputes under 29 enactments are intended to get covered under the LDRS umbrella.
4. Who is eligible to avail benefit under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019?
All persons are eligible to opt for the scheme. Except the below mentioned-
5. Quantum of Relief available under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019?
|1.||i). Total tax due <= 50 Lacs, Relief = 70% of tax dues
ii). Total tax due >50 Lacs, Relief = 50% of tax dues
|2.||i). Total tax due <= 50 Lacs, Relief = 60% of tax dues
ii). Total tax due >50 Lacs, Relief = 40% of tax dues
|3.||100% (i.e. Entire Amount)||
6. Meaning of “Tax Dues” for the purpose of Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019?
|1.||Where a single appeal arising out of an order is pending as on the 30th day of June, 2019 before the appellate forum
Tax Due: The total amount of duty which is being disputed in the said appeal
|2.||Where more than one appeal arising out of an order, one by the declarant and the other being a departmental appeal, which are pending as on the 30th day of June, 2019 before the appellate forum
Tax Due: The sum of the amount of duty which is being disputed by the declarant in his appeal and the amount of duty being disputed in the departmental appeal.
|3.||Where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30th day of June, 2019
Tax Due: The amount of duty stated to be payable by the declarant in the said notice.
|4.||Where an enquiry or investigation or audit is pending against the declarant
Tax Due: The amount of duty payable under any of the indirect tax enactment which has been quantified on or before the 30th day of June, 2019
|5.||Where the amount has been voluntarily disclosed by the declarant
Tax Due: The total amount of duty stated in the declaration
|6.||Where an amount in arrears relating to the declarant is due
Tax Due: The amount in arrears
7. Whether any interest or penalty is payable?
No, the declarant is not required to pay any amount towards interest and penalty.
8. Whether pre deposit made before filing an appeal be adjusted?
Yes, the declarant can adjust any pre deposit made.
However if the pre deposit is more than the amount due under the LDRS, no refund shall be provided.
9. Mode of payment of liability under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019?
Amount payable under LDRS shall not be paid by utilizing input tax credit account under the indirect tax enactment or any other Act.
Thus, it appears that the payment is to be discharged in cash.
10. Whether tax discharged under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 can be claimed as ITC?
The tax discharged under LDRS cannot be claimed as ITC
11. What is the procedure for filing declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019?
Step 1: Submission of declaration electronically in prescribed manner (Form and manner yet to be prescribed)
Step 2: Designated Committee to verify the correctness of the declaration, except in case of voluntary disclosure
Step 3: a) Declared dues accepted by Designated Committee (‘DC’)- DC shall issue statement of amount payable electronically within 60 days from date of declaration
b) Amount assessed by DC is higher than the declaration amount– DCshall issue estimate of amount payable electronically within 30 days from the date of declaration and the declarant shall be afforded an opportunity of being heard before issue of final statement
Step 4: Declarant will have to pay the amount electronically within 30 days from the date of issue of such statement.
Step 5: DC shall issue a discharge certificate in electronic form, within 30 days of said payment and submission of proof of withdrawal of appeal, Discharge Certificate shall be conclusive to the matter and time period.
Any appeal or reference or a reply to the show cause notice against any order or notice giving rise to the tax dues, before the appellate forum, other than the Supreme Court or the High Court shall be deemed to be withdrawn.
In case of any writ petition or appeal or reference before the High Court or Supreme Court, the declarant shall file an application for withdrawal.
12. When is a Discharge Certificate issued under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 and its consequences?
Upon payment of the amount indicated in statement of amount payable and proof of withdrawal of appeal/ reference/ writ petition, the DC shall issue a discharge certificate within 30 days of producing proof of payment and such withdrawal.
Issuance of discharge certificate with respect to the amount payable, shall be conclusive as to the matter and time period stated therein, and;
13. Comparison of Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 with VCES?
Voluntary Compliance Encouragement Scheme (VCES) offered waiver of interest and penalty, whereas LDRS offers waiver of tax dues itself apart from interest and penalty and prosecution.