Study of Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

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Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

It shall come into force w.e.f a date to be notified

Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 is a Dispute Resolution cum Amnesty Scheme for legacy cases of Central Excise, Service Tax and Cess. It covers past disputes of taxes which have got subsumed in GST namely Central Excise, Service Tax and Cesses. The scheme to be available from a date to be notified.

Nirmala Sitharaman ( Minister of Finance) in her Budget Speech said that GST has just completed two years. An area that concerns me is that we have huge pending litigations from pre-GST regime. More than Rs. 3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow business to move on. I, therefore, propose, a Legacy Dispute Resolution Scheme that will allow quick closure of these litigations. I would urge the trade and business to avail this opportunity and be free from legacy litigations.

Taxes/Cesses covered under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

The Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or Chapter V of the Finance Act, 1994 and the rules made there under and
Twenty Six other Acts and Rules covered

Objectives of the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

One time measure for liquidation of past disputes of central excise and service tax
To provide an opportunity of voluntary disclosure to non-compliant taxpayers.

Cases covered under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

A show cause notice or Appeals arising out of a show cause notice pending as on the 30^th June, 2019
An amount in arrears
An enquiry, investigation or audit where the amount is quantified on or before 30^th June, 2019
A voluntary disclosure

Exclusions from the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

Cases in respect of excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 (this includes tobacco and specified petroleum products; Ch.24-Tobacco; Ch.27-Coal)
Cases for which the taxpayer has been convicted under the Central Excise Act, 1944 or the Finance Act, 1944
Cases involving erroneous refunds
Cases pending before the Settlement Commission

Eligibility for Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

Any person falling under the following categories is eligible, subject to other conditions under the Scheme, to file a declaration:
- Who has a SCN for duty or one or more appeals arising out of such notice pending and where the final hearing has not taken place as on 30.06.2019.
- Who has been issued SCN for penalty and late fee only and where the final hearing has not taken place as on 30.06.2019.
- Who has recoverable arrears pending.
- Who has cases under investigation and audit where the duty involved has been quantified and communicated to party or admitted by him in a statement on or before 30th June, 2019.
- Who want to make a voluntary disclosure.

“Quantified” means a written communication of the amount of duty payable under the indirect tax enactment.

“Audit” means any scrutiny, verification and checks and will commence when a written intimation from the Central Excise officer regarding conducting of audit is received.

Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 (Contd)

“Enquiry or investigation”, under any of the indirect tax enactment, shall include the following actions, namely:—

(i) search of premises;

(ii) issuance of summons;

(iii) Letters asking for production of accounts, documents or other evidence;

(iv) recording of statements.

SL.NO:	LEVEL OF PENDENCY	DUTY / TAX / CESS AMOUNT INVOLVED	RELIEF IN TAX/DUTY/ CESS LIABILITY GRANTED	TAX/DUTY/CES S PAYABLE FINALLY	OTHER RELIEFS
1	Amount Pending as Dispute on Account of Show Cause Notice / Appellate Authority as on 30th June 2019	up to Rs. 50 Lakhs	70%	30%	PENALTY / INTEREST AND PROSECUTION ARE WAIVED
1		Above Rs. 50 Lakhs	50%	50%
2	The Show Cause Notice is only for Penalty / Late Fee and the Tax is either paid or NIL. Penalty is imposed for Partners etc.,	Penalty / Late Fee	Entire Penalty or Late Fee	NIL
3	Amount on account of Arrears (where no further appeals filed) or all appeals lost.	upto Rs. 50 Lakhs	60%	40%
3		Above Rs. 50 Lakhs	40%	60%
4	Amount were assessed and declared as self-admitted liabilities but not paid.	upto Rs. 50 Lakhs	60%	40%
4		Above Rs. 50 Lakhs	40%	60%
5	Amount Quantified in any Audit, Enquiry, investigation etc.,	upto Rs. 50 Lakhs	70%	30%
5		Above Rs. 50 Lakhs	50%	50%
6	Voluntary Disclosure		NIL	100%

Scope of tax relief covered under section 124(1) (b) with respect to SCN for late fee and penalty only where the amount of duty in the said notice has been paid or is NIL.
- The tax relief shall be the entire amount of late fee or penalty
Cases of appeal before the appellate forum (Commissioner (Appeals) /CESTAT) where appeal has been heard finally on or before the 30th day of June, 2019
- No, the person will not be eligible
Scope under the scheme when adjudication order determining the duty/tax liability is passed and received prior to 30.06.2019, but the appeal is filed on or after 01.07.2019
- No, such a person shall not be eligible
Coverage of SCNs under the Scheme with respect to main noticee vis-à-vis co-notice: In case of a SCN issued to an assesse demanding duty and also proposing penal action against him as well as separate penal action against the co-noticee/s specified therein, if the main noticee has settled the tax dues, the co-noticee/s can opt for the scheme for the waiver of penalty.
Treatment of Pre-deposit: Any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted while issuing the statement indicating the amount payable by the declarant.

Benefits available under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

Total waiver of interest, penalty and fine in all cases • Immunity from prosecution
In cases pending in adjudication or appeal, a relief of 70% from the duty demand if it is ₹ 50 Lakh or less and 50%, if it is more than ₹ 50 Lakh. The same relief is available for cases under investigation and audit where the duty involved is quantified on or before 30th June, 2019.
In case of an amount in arrears, the relief is 60% of the confirmed duty amount if the same is ₹ 50 Lakh or less and it is 40% in other cases.
In cases of voluntary disclosure, the declarant will have to pay full amount of disclosed duty.
Where the declarant has filed an appeal or reference or a reply to the SCN against any order or notice giving rise to the tax dues, before the appellate forum, other than the Supreme Court or the High Court, then, such appeal or reference or reply shall be deemed to have been withdrawn.
In case of a writ petition or appeal or reference before any High Court or the Supreme Court, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition, appeal or reference and after withdrawal of such writ petition, appeal or reference with the leave of the Court, he shall furnish proof of such withdrawal to the Designated Committee.
No input tax credit for any amount paid under the Scheme can be taken
The amount under the Scheme cannot be through the input tax credit account under the indirect tax enactment or any other Act
In cases where pre-deposit or other deposit already paid exceeds the amount payable as indicated in the statement of the designated committee, the difference shall not be refunded.
Where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be institute