Chapter V of Finance (No. 2) Act, 2019

In the past, indirect tax laws were fraught with huge pending litigation with more than Rs. 375,000 crores being blocked in Service Tax- and Central Excise-related litigations. In Budget 2019, the Honourable Finance Minister Nirmala Sitharaman proposed to introduce a dispute-resolution scheme, the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, for cases pertaining to indirect taxThe Scheme has now been notified and will be operationalized from 1st September 2019 and would continue till 31st December 2019. Government expects that one time opportunity by way of the Scheme to be availed by large number of taxpayers for closing their pending disputes relating to legacy Service Tax, Central Excise & 26 other indirect tax enactments cases that are now subsumed under GST so they can focus on GST. The most attractive aspect of the Scheme is that it provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine, penalty, in all these cases, there would be no other liability of interest, fine or penalty. There is also a complete amnesty from prosecution.

Act & Applicability – Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereafter in this Chapter referred to as the “Scheme”) made applicable on the 1st day of September, 2019 by way of Notification no. 05/2019, Central Excise-NT through Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019.

According to section 123, Chapter V of Finance (No. 2) Act, 2019, Tax Dues means –

a. Arrears arising out of single appeal as on the 30th June 2019 (Department or party appeal);

b. Arrears arising out of more than one appeal as on the 30th June 2019 (Department and party appeal);

c. Show cause notice issued and the amount is payable by party as on 30th June 2019;

d. Enquiry or investigation or audit is pending and amount payable has been quantified as on 30th June 2019;

e. Amount has been voluntarily disclosed;

f. Amount in arrears.

As per section 124,

The relief available to a declarant under this scheme shall be calculated as follows:-

Amount of Duty SCN or one or more appeal pending as on 30th June 2019 SCN for late fees or penalty only and duty is paid/nil An amount in arrear or amount payable as per return Enquiry or investigation or Audit (Amount quantified as on 30th June 2019) Voluntary disclosure
Less than or equal to 50 lakhs 70% Entire amount of late fees or penalty 60% 70% Relief only for Interest & penalty, no relief for tax dues
More than 50 lakhs 50% 40% 50%

Relief calculated above shall be subject to condition that

  • Any amount paid as pre deposit shall be deducted when issuing the statement indicating the amount payable by declarant.
  • Provided that if the amount of predeposit or deposit already paid by the declarant exceeds the amount payable by the declarant, the declarant shall not be entitled to any refund.

As per section 125, All persons shall be eligible to make a declaration under this Scheme except the following, namely:-

(a) Appeal before appellate forum and heard finally on or before 30th June 2019;

(b) Convicted for any offence for the matter for which he intends to file a declaration;

(c) Issued a SCN and final hearing has taken place on or before 30th June 2019;

(d) Issued a SCN for an erroneous refund or refund;

(e) Subjected to enquiry or investigation or audit and duty involved has not been quantified on or before 30th June 2019;

(f) Voluntary disclosure after subjected to enquiry or investigation or audit & filled a return indicating duty as payable, but has not paid it;

(g) Application in the Settlement commission;

(h) Excisable goods from Fourth schedule to the Central Excise Act, 1944;

The declaration under section 125 shall be made electronically at https://cbic-gst.gov.in in Form SVLDRS-1 by the declarant, on or before the 31st December, 2019. A separate declaration shall be filed for each case.

A “case” means –

(a) a show cause notice, or one or more appeal arising out of such notice which is pending as on the 30th   day of June, 2019; or

(b) an amount in arrears; or

(c) an enquiry or investigation or audit where the amount is quantified on or before the 30th day of June, 2019; or

(d) a voluntary disclosure.

On receipt of declaration, an auto acknowledgement bearing a unique reference number shall be generated by the system.

As per section 126, the designated committee shall verify the correctness of the declaration made by the declarant under section 125.

The Designate Committee under section 126 shall consist of:-

Tax Dues Designate Committee Consist of
More than Rs. 50 Lakhs Principal Commissioner or commissioner and Additional Commissioner or Joint Commissioner of Central Excise & Service Tax
Rs. 50 Lakhs or less Additional Commissioner or Joint commissioner and Deputy Commissioner or Assistant Commissioner of Central Excise & Service Tax

The declaration made under section 125, except when it relates to a case of voluntary disclosure of an amount of duty, shall be verified by the designated committee based on the particulars furnished by the declarant as well as the records available with the Department

Provided that no such verification shall be made in case where a voluntary disclosure of an amount of duty has been made by the declarant.

Verification by designated committee and issue of estimate, etc

The declaration made under section 125, except when it relates to a case of voluntary disclosure of an amount of duty, shall be verified by the designated committee based on the particulars furnished by the declarant as well as the records available with the Department.

  • When amount declared by declarant equals to amount estimated by the designated committee, a statement in electronic form shall be issued within 60 days from the date of declaration (Form SVLDRS-1) in Form SVLDRS-3 setting forth therein the particulars of the amount payable.
  • When amount declared by declarant is less than the amount estimated by the designated committee, then estimate of amount payable in electronic form shall be issued within 30 days from the date of declaration (Form SVLDRS-1) in Form SVLDRS-2 along with a notice of opportunity for personal hearing..
  • If the declarant wants to indicate agreement or disagreement with the estimate referred in Form SVLDRS-2  or wants to make written submissions or waive personal hearing or seek an adjournment, he shall file electronically Form SVLDRS2A indicating the same. If no such agreement or disagreement is indicated till the date of personal hearing and the declarant does not appear before the designated committee for personal hearing, the committee shall decide the matter based on available records.
  • Provided that on sufficient cause being shown by the declarant, only one adjournment may be granted by the designated committee electronically in Form SVLDRS-2B.

Provided if the declarant does not appear before the designated committee for personal hearing after adjournment, the committee shall decide the matter based on available records.

  • After hearing the declarant, a statement in electronic form indicating the amount payable by the declarant, shall be issued within a period of sixty days from the date of receipt of the declaration.
  • The declarant shall pay electronically through internet banking, the amount payable as indicated in the Form SVLDRS-3, within a period of thirty days from the date of issue of such statement.
  • Appeal or reference or reply before the appellate forum shall be deemed to have been withdrawn.
  • Writ petition or appeal or reference to High Court or Supreme Court shall be withdrawn by declarant and proof of the same shall be submitted electronically.
  • Within thirty days of the date of issue of Form SVLDRS-3, the designated committee may modify its order only to correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo motu by issuing electronically a revised Form SVLDRS-3
  • On payment of the amount determined in Form SVLDRS-3, and on submission of proof of withdrawal of writ petition, appeal, reference, designate committee shall issue electronically in Form SVLDRS-4 a discharge certificate within 30 days of the said payment and submission of the said proof, whichever is later.

As per Section 129, After issuing the discharge certificate, the declarant shall not be liable to pay any further duty, interest, penalty, not liable to be prosecuted, no matter and time period covered by such declaration shall be reopened in any other proceeding  with respect to the matter and time period covered in the declaration.

In a case of voluntary disclosure false declaration is made, 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 instituted.

As per section 130, any amount paid under this scheme:-

  • Shall not be paid through Input Credit Tax Account
  • Shall not be refundable in any circumstances
  • Shall not be taken as Input Tax Credit or entitle any person to take Input Tax Credit as recipient of the excisable goods or taxable goods.

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 SabkaVishwas – Legacy Dispute Resolution Scheme, 2019 and make a new beginning.

Author Bio

Qualification: CA in Job / Business
Company: N/A
Location: New Delhi, IN
Member Since: 16 Sep 2019 | Total Posts: 1

More Under Excise Duty

Leave a Comment

Your email address will not be published. Required fields are marked *