In the Union Budget 2019-20, the 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 and it will continue till 31st December 2019.
This scheme is bold endeavor to upload the baggage relating to legacy taxes viz. Central Excise and Service Tax that have been subsumed under GST and allow business to make new beginning and focus on GST. Therefore, it is incumbent upon all officers and staff of CBIC to partner with the trade and industry to make the scheme grand success.
Dispute resolution and amnesty are the two components of this scheme. The dispute resolution component is aimed at liquidating the legacy cases locked up in litigation at various forums whereas the amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability to pay tax dues.
2) Objectives of the scheme:-
1) The scheme is one time measure for liquidation of past disputes of Central Excise, Service Tax and other 26 indirect tax enactments.
2) The scheme provides that the eligible person shall declare the unpaid tax dues and pay the same in accordance with the provision of the scheme.
3) The scheme provides for certain immunities including penalty, interest or any other proceedings including prosecution to those person who pay the declared tax dues.
3) Relief extended under this scheme:-
a) For all the cases pending in adjudication or appeal (at any forum), the relief is to extent of 70% of the duty involved if it is Rs. 50 lakhs or less and 50% if it is more than Rs. 50 lakhs. The same relief is available for cases under investigation and audit where the duty involved is quantified and communicated to the party or admitted by him in a statement on or before 30.06.2019.
(Situation 1:-If the amount of duty (including CENVAT credit) being litigated is Rs.50 lakhs, then the tax payer only need to pay only Rs. 15 lakhs (i.e. 30% of the dues under litigation) to settle this case).
(Situation 2:-If the amount of duty (including CENVAT credit) being litigated is Rs.1 Crore, then the tax payer only need to pay only Rs. 50 lakhs (i.e. 50% of the dues under litigation) to settle this case).
b) In case of confirmed duty demand, where there is no appeal pending, the relief offered is 60% of the confirmed duty amount if the same is Rs.50 lakhs or less and it is 40% if the confirmed duty amount is more than Rs. 50 lakhs.
(Situation 3:-If the amount of arrears is Rs. 50 lakhs, then the tax payer only need to pay only Rs. 20 lakhs (i.e. 40% of the dues under litigation) to settle this case).
c) In case of voluntary disclosure of duty not paid, full amount of disclosed duty have to be paid.
d) There will be full waiver of interest and penalty under all the categories of cases, as at (a) to (c) above.
4) Eligibility to file declaration:-
Any person falling under the following categories is eligible, subject to other conditions, to file a declaration under the Scheme:
a) Who has a show cause notice (SCN) for demand of duty/tax or one or more pending appeals arising out of such notice where the final hearing has not taken place as on 30-Jun-2019.
b) Who has been issued SCN for penalty and late fee only and where the final hearing has not taken place as on 30-Jun-2019.
c) Who has recoverable arrears are pending.
d) Who has cases under investigation and audit where the duty/tax involved has been quantified and communicated to him or admitted by him in a statement on or before 30th June, 2019.
e) Who wants to make a voluntary disclosure.
5) Not eligible to make declaration under this scheme:-
> Appeal before appellate forum and heard finally on or before 30-Jun-2019.
> Convicted under any offence for the matter for which he intends to file a declaration.
> Issued a show cause notice (SCN) and final hearing has taken place on or before 30-Jun-2019.
> Issued a show cause notice (SCN) for erroneous refund or refund.
> Excisable goods from fourth schedule to the central excise Act, 1944.
> Application in the settlement commission.
> Voluntary disclosure after being subjected to any enquiry or investigation or audit & filed a return, indicating duty as payable, but has not paid it.
> Subjected to enquiry or investigation or audit and duty involved has not been quantified on or before 30th June, 2019.
6) After issuance of discharge certificate:-
a) Not be liable to pay any further duty, interest, or penalty with respect to the matter and the time period covered.
b) Not be liable to be prosecuted under the Indirect Tax enactment.
c) Shall not be reopened in any other proceeding under the Indirect Tax enactment.
d) If false declaration is made in voluntary disclosure, proceedings under the applicable laws shall be started within a time limit of one year.
7) Restrictions of the scheme:-
a) Shall not be paid through the ITC account.
b) Shall not be taken as ITC, or entitle any person to taken ITC, as recipient, of the excisable goods or taxable service.
c) Shall not be refundable under any circumstances.
As the objective of the Scheme is to free as large a segment of the taxpayers from the legacy taxes as possible, the relief given there under is substantial. The Scheme is especially tailored to free the large number of small taxpayers of their pending disputes with the tax administration. Government urges the taxpayers and all concerned to avail the Sabka Vishwas – Legacy Dispute Resolution Scheme, 2019 and make a new beginning.