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) ?

Sr. No. Clause Particulars
1. 119 Short Title and commencement
2. 120 Definitions
3. 121 Application of scheme to indirect tax enactments
4. 122 Tax Dues
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-

  • 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;
  • who have been convicted for any offence punishable for the matter for which he intends to file a declaration;
  • who have been issued a show cause notice and the final hearing has taken place on or before the 30th day of June, 2019;
  • who have been issued a show cause notice for an erroneous refund or refund;
  • 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;
  • a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit; or
  • a person making a voluntary disclosure after having filed a return wherein he has indicated an amount of duty as payable, but has not paid it;
  • who have filed an application in the Settlement Commission for settlement of a case;
  • persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944.

 5. Quantum of Relief available under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019?

Sr. No. Relief Scenarios
1. i).   Total tax due <= 50 Lacs, Relief = 70% of tax dues

ii). Total tax due >50 Lacs, Relief = 50% of tax dues

  • where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019

or

  • where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 2019
2. i).   Total tax due <= 50 Lacs, Relief = 60% of tax dues

ii). Total tax due >50 Lacs, Relief = 40% of tax dues

  • where the tax dues are relatable to an amount in arrears in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated
3. 100% (i.e. Entire Amount)
  • Where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty
4. No Relief
  • Where the tax dues are payable on account of a voluntary disclosure by the declarant

 6. Meaning of “Tax Dues” for the purpose of Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019?

Sr. No

Scenario

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;

  • The declarant shall not be liable to pay any further duty, interest or penalty with respect to the matter and time period covered in the declaration
  • The declarant shall not be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration
  • No matter and time period covered by the declaration shall be reopened in any other indirect enactment.

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.

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3 Comments

  1. Kishan Patel says:

    We have submitted Documents to Audit department on May-3019 and department has not make Audit till date (25.07.2019) . Now if he found some technical PARA or short payment of excise or service tax duty than who is responsible for not quantify tax liability before 30.06.2019 ? Why honest assesses not get benefits of this scheme ?

  2. Unnikrishnan.V says:

    There’s no specific mention on waiver of interest and penalty in all cases,except voluntary declared Tax Dues.Clause 128 states no further tax,interest or penalty shall be payable,on payment of dues decided by the notified Authority .
    Can this clause be inferred as full waiver of interest and penalty in all tax arrears or dues eligible for scheme?
    There’s no justification in debarring cases where orders are not issued after final hearing before 30/06/2019.The delay in decision by adjudicating/appellate authority cannot act as a deterrant to assessees.

  3. SUJEET KUMAR says:

    SABKA VIKAS IS ONLY FOR THOSE WHO FILE HAD AN ACTION RELATE TO RETURN NOT FOR THOSE WHO HAD NO ACTION.

    IT SHOWS THAT ANY PERSON CAN FILE RETURN WITHOUT PAYMENT OF TAX.

    IF ANYONE DONE IT AS ABOVE THEN VIKAS APPLICABLE OTHERWISE NO VIKAS

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