Long Awaited and Vital scheme for Taxpayers…….

Finally, in the Union Budget 2019-20, the Hon’ble Finance Minister announced the Sabka Vishwas-Legacy Dispute Resolution Scheme, 2019. The Scheme has now been notified and operationalized from 1st September 2019. The Scheme would continue till 31st December 2019. Government expects the Scheme will be availed by large number of taxpayers for closing their pending disputes relating to legacy Service Tax and Central Excise cases that are now subsumed under GST so that they can focus on GST. Over 1.50 lacs cases are disputed involving more than Rs.3.80 lacs crores demand and pending at various forums since long time.

The two main components of the Scheme are dispute resolution and amnesty. The dispute resolution component is aimed at liquidating the legacy cases of Central Excise and Service Tax that are subsumed in GST and are pending in litigation at various forums. The amnesty component of the Scheme offers an opportunity to the taxpayers to pay the outstanding tax and remain free from any other consequence under the law. 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 and penalty,

For all the cases pending in adjudication or appeal – in any forum – this Scheme offers a relief of 70% from the duty demand 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 30th June, 2019. Further, in cases 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. Finally, in cases of voluntary disclosure, the person availing the Scheme will have to pay only the full amount of disclosed duty.

The Scheme is especially tailored to free the large number of small taxpayers from their pending disputes with the tax administration. Government urges the taxpayers and all concerned to avail the benefits of Sabka Vishwas – Legacy Dispute Resolution Scheme, 2019 and mark a new beginning.

After introducing GST, many states announced “Amnesty” scheme for VAT/Sales Tax litigation. This scheme provides chance to taxpayers to close never-ending litigation by offering tax relief from 40% to 70%, full waiver of interest & penalty. Complete waiver from prosecution. This scheme provides complete closure of litigation and no further action on the taxpayers who didn’t discharge tax liability correctly. This scheme is like a jackpot for the persons who never deposit tax properly by availing the benefits of tax relief, complete waiver of interest & penalty, moreover they will also get a stamped document by way of discharge certificate certifying that no proceedings shall be initiated against them. This is bold step of the Government.

Provisions of the Finance Act, 2019 (Chapter V) Sec.119 – 135.

Sec-120 (1) – Short Title

This Scheme shall be called the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Sec-120 (2) – Commencement

It shall come into force w.e.f.  1st September, 2019 vide notification No. 04/2019 CE-NT dated 21.08.2019.

Sec-121– Definitions

(a) “amount declared” means the amount declared by the declarant u/s 125 (i.e. Taxes due less relief). It means net amount payable as declared by the declarant under this scheme.

i. It may be payable or

ii. It may be nil (in case seeking waiver from Penalty or Interest)

(b) “amount estimated” means the amount estimated by the designated committee u/s It means net amount payable as estimated by the designated committee under this scheme.

i. It may be payable or

ii. It may be nil (in case granting waiver from Penalty or Interest)

(c) “amount in arrears” means the amount which is recoverable as arrears of duty under the Indirect tax enactment (i.e. Excise duty, Service tax or cess), on account of

(i) NO APPEAL is filed against the “Order” (i.e. SCN) or “Order in Appeal” (i.e. OIO, Order passed by CESTAT or High Courts or Apex Court) before expiry of time period for filing

    • If assessee doesn’t want to file an appeal against an order or order in appeal even though he has time to file such appeal, in such situation demand stated in order or order in appeal will be termed as “confirmed” demand and such confirmed demand comes under the definition of “amount in arrears”. (for this purpose assessee has to file a declaration that he will not file any appeal against such matter)
    • Mr. A has filed an appeal after 30.06.2019 against an order of CESTAT, in this case-
      • A is not eligible for this scheme or, alternatively,
      • If he withdraws such appeal AND furnishes undertaking that he will not file any appeal against such matter, demand stated in order or order in appeal will be termed as “confirmed” demand and such confirmed demand comes under the definition of “amount in arrears” not “tax dues”. {para 2(vi) of Circular No.1073/06/2019.CX dated 29.10.2019}

(ii) An “Order in Appeal” attaining Finality.

    • This restriction will apply ONLY on those cases which are finally heard up to 30.06.2019. Demand confirmed under this situation will come under “amount in arrears”.
    • If Order is awaited and matter is rescheduled for any reason even after the final hearing, in this situation Order doesn’t attaining finality. Hence this situation will be called as pending appeal up to 30.06.2019 and such disputed amount shall be termed as “tax dues”. {para 10(e) of Circular No. 1071/4/2019-CX.8 dated 27.08.2019}

(iii) A return has been filed up to 30.06.2019, under Indirect Tax Enactment, by admitting the tax liability but it is unpaid.

    • In this case such unpaid amount shall be termed as “amount in arrear”.

(d) “amount of duty” means amount of

The Central Excise Duty,

The Service Tax and

Cess Payable.

(e) “amount payable” means the amount finally determined by the designated committee and as indicated in Form SVLDRS-3 (tax dues – tax relief).

(f) “Appellate forum” means

(iv) The Supreme Court,

(v) High Courts,

(vi) CESTAT,

(vii) The Commissioner (Appeals)

(g) “audit” means any scrutiny, verification and checks carried out under the indirect tax enactment, other than an enquiry or investigation, and it should commence with the written communication from the central excise

(h) “declarant” means a person who is eligible to make a declaration and files such declaration u/s 125.

(i) “declaration” means the declaration filed under section 125.

(j) “departmental appeal” means appeal filed by Central Excise Officer before the appellate forum.

(k) “designated committee” means the committee referred to in section

(l) “discharge certificate” means the certificate issued by the designated committee under section 127;

(m) following actions taken under Indirect Tax Enactment shall be termed as ‘‘enquiry or investigation’’.

i. search of premises;

ii. issuance of summons;

iii. requiring the production of accounts, documents or other evidence;

iv. recording of statements;

(n) “indirect tax enactment” means the enactments specified in section 122;

(o) “Order” means a statement of determination in relation to show cause notice issued under Indirect Tax Enactment.

(p) “order in appeal” means an order passed by an appellate forum with respect to an appeal filed before it;

(q) “person” includes, an individual, HUF, Company, Society, LLP, Firm, AOP/BOI, Govt., Local authority, assessee defined under rule 2 of the Central Excise Rule, 2002 and every artificial judicial person.

(r) “quantified’ means a written communication of the amount of duty payable under the Indirect Tax Enactment.

– Duty amount may be quantified either by the department or by the assessee through the written communication. (i.e. intimation of duty demanded by the department or duty liability admitted by the assessee)

(s) “statement” means the statement issued by the designated committee u/s 127.

(t) “tax relief” means the amount of relief granted u/s 124.

Sec-122 – Application of scheme

(a) 

(i) The Central Excise Act, 1944,

(ii) The Central Excise Tariff Act, 1985,

(iii) Chapter V of Finance Act, 1994 (Service Tax)

(iv) The Rules made for above (i) to (iii)

(b) the following Acts, namely: —

i. the Agricultural Produce Cess Act,1940;

ii. the Coffee Act, 1942;

iii. the Mica Mines Labour Welfare Fund Act, 1946;

iv. the Rubber Act, 1947;

v. the Salt Cess Act, 1953;

vi. the Medicinal and Toilet Preparations (Excise Duties) Act, 1955;

vii. the Additional Duties of Excise (Goods of Special Importance) Act, 1957;

viii. the Mineral Products (Additional Duties of Excise and Customs) Act, 1958;

ix. the Sugar (Special Excise Duty) Act, 1959;

x. the Textiles Committee Act, 1963;

xi. the Produce Cess Act, 1966;

xii. the Limestone and Dolomite Mines Labour Welfare Fund Act, 1972;

xiii. the Coal Mines (Conservation and Development) Act, 1974;

xiv. the Oil Industry (Development) Act, 1974;

xv. the Tobacco Cess Act, 1975;

xvi. the Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Cess Act, 1976;

xvii. the Bidi Workers Welfare Cess Act, 1976;

xviii. the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978;

xix. the Sugar Cess Act, 1982;

xx. the Jute Manufacturers Cess Act, 1983;

xxi. the Agricultural and Processed Food Products Export Cess Act, 1985;

(c) Any other Act, as the Central Government may, by notification in the Official Gazette, specify.

Sec-123 – Tax Dues means-

(a) (i)  Where single appeal is pending up to 30.06.2019 against an order before the appellate forum, the disputed amount shall be termed as “tax due”.

Example- SCN was issued to assessee for Rs.10 lacs duty amount and Rs.2 Lacs penalty. OIO passed for Rs.5 lacs duty amount and Rs.1 lac penalty and assesse filed appeal before CESTAT, in this case disputed amount is Rs.5 lacs and tax due will be Rs. 5 lacs.

(ii)  Where more than one appeals are pending up to 30.06.2019 against an order before the appellate forum, one from assessee side and other from department side. In this case “tax Due” shall be calculated as under: –

Tax due = disputed amount (in assessee appeal + departmental appeal)

Example- SCN was issued to assessee for Rs.40 lacs duty amount and Rs.10 Lacs penalty. OIO passed for Rs.30 lacs duty amount and Rs.7 lacs penalty. Assesse filed an appeal before CESTAT for Rs.30 lacs duty amount and Rs.7 lacs penalty and department also filed appeal against the relief given to assess for Rs.10 lacs duty amount and Rs.3 lacs penalty. In this case disputed amount is (Rs.30 + Rs.10 lacs) duty amount and tax due will be Rs. 40 lacs.

Proviso: – If appeal filed by declarant is finally heard up to 30.06.2019, there will be no disputed amount. Hence no “tax due” in this situation. However, amount demanded in final hearing under this situation will be the “amount in arrears”.

(b) Where a SCN has been issued to declarant up to 30.06.2019 under indirect tax enactment, duty stated to be payable in said SCN shall be the “tax due”.

Proviso: – If said SCN has been issued to the declarant and other persons making them jointly or severally liable for an amount, amount payable jointly or severally shall be taken as disputed amount and it is “tax due”.

(C)  Where any enquiry, investigation or audit is pending under Indirect Tax Enactment and    duty payable amount has been quantified, such quantified amount is “tax due”.

(D) Where declarant has voluntary disclosed the amount, the “tax due” shall be the amount which is stated declared in declaration.

(E) Amount in arrears relating to declarant is due, “tax due”.

Sec-124 – Relief available under this scheme-

Sec.124(I)Subject to the condition specified in Sec.124(2), the relief available to the declarant under this scheme shall be calculated as under: –

(a) Where tax dues are relatable to a SCN or one or more appeals arising out of such SCN and the same are pending as on 30.06.2019, relief amount shall be: –

(i) 70% of tax dues, if amount of duty is up to Rs.50 lacs (i.e. only 30% is required to be paid).

(ii) 50% of tax dues, if amount of duty is more than Rs.50 lacs (i.e. only 50% is required to be paid).

“Amount of Duty” for clause (a) is total disputed duty.

Example: – Mr. A filed an appeal for a disputed amount of Rs.70 lacs and pre-deposit amount is Rs.25 lacs. In this case amount of duty shall be Rs.70 lacs and relief will Rs.35 lacs (i.e. 50% of amount of duty {para 2(iv) of Circular No.1072/05/2019-CX dated 25.09.2019}).

(b) Where tax dues are relatable to a SCN for late fee or penalty only and SCN is issued only to collect late fee or penalty, entire amount of late fee or penalty shall be termed as relief.

(c) Where tax dues are relatable to an amount in arrears, relief amount shall be: –

(i) 60% of tax dues if amount of duty is up to Rs.50 lacs (i.e. only 40% is required to be paid).

(ii) 40% of tax dues, if amount of duty is more than Rs.50 lacs (i.e. only 60% is required to be paid).

“Amount of Duty” for clause (c) is total disputed duty less pre-deposit or deposit during investigation.

Example: – Mr. A has duty demand of Rs.70 lacs and pre-deposit amount is Rs.25 lacs and no appeal is filed. In this case amount of duty shall be Rs.45 lacs (70-25) and relief will Rs.27 lacs (i.e. 60% of amount of duty {para 2(iv) of Circular No.1072/05/2019-CX dated 25.09.2019}).

(iii) In a return if assesse has indicated an amount of duty payable but not paid, in this case relief amount shall be: –

  • 60% of tax dues, if indicated payable amount is up to Rs.50 lacs (i.e. only 40% is required to be paid).
  • 40% of tax dues, if indicated payable amount is more than Rs.50 lacs (i.e. only 60% is required to be paid).
Mr. B filed a return on 20.06.2019 total duty liability was Rs.80 lacs out of which Rs.40 lacs already paid at the time of filing return and balance amount is outstanding.

In this case indicated payable amount is Rs.40 lacs and relief amount shall be Rs.24 lacs (Rs.40 lacs * 60%) and payable amount shall be Rs.16 lacs

(d) Where tax dues are linked with any enquiry, investigation or audit which are pending but amount of duty has been quantified up to 30.06.2019, relief amount shall be: –

(i) 70% of tax dues, if quantified amount is up to Rs.50 lacs (i.e. only 30% is required to be paid).

(ii)  50% of tax dues, if quantified amount is more than Rs.50 lacs (i.e. only 50% is required to be paid).

(e)  Where tax dues are payable on account of voluntary disclosure by the declarant, No Relief Available.

Sec.124 (2) – The following amount shall be deducted from the amount of duty payable (i.e. tax dues-relief) while issuing the statement indicating the amount payable by the declarant. 

  • Amount paid as pre-deposit at any stage of appellate proceedings under the Indirect Tax Enactment or
  • As deposit during enquiry, investigation or audit

Proviso: – Declarant shall not be entitled for refund if said pre-deposit or deposit amount exceeds the amount payable under this scheme as indicated in the statement issued by the designated committee.

Note 1: – If tax dues on account of “litigation”, tax dues less relief shall be calculated as below: – {para 2(iv) of Circular No.1072/05/2019-CX dated 25.09.2019}

Example: – Mr. A filed an appeal for a disputed amount of Rs.90 lacs and pre-deposit amount is Rs.30 lacs. In this case,

Tax dues = Rs.90 Lacs

Relief = 50% of Rs.90 Lacs (i.e. Rs.45 Lacs)

Pre-deposit = Rs.30 Lacs

Amt payable under this scheme = Tax due (-) relief (-) pre-deposit Rs.90 lacs – Rs.45 lacs – Rs.30 Lacs = Rs.15 Lacs

Note 2: – If tax dues on account of “litigation”, tax dues less relief shall be calculated as below: – {para 2(iv) of Circular No.1072/05/2019-CX dated 25.09.2019}

Example: – Mr. A filed an appeal for a disputed amount of Rs.90 lacs and pre-deposit amount is Rs.50 lacs. In this case,

Tax dues = Rs.90 Lacs

Relief = 50% of Rs.90 Lacs (i.e. Rs.45 Lacs)

Pre-deposit = Rs.50 Lacs

Amt payable under this scheme = Tax due (-) Relief (-) Pre-deposit Rs.90 Lacs – Rs.45 lacs – Rs.50 Lacs = (-) Rs.5 lacs but restricted to NIL

Note 3: – If tax dues on account of “Arrears”, tax dues less relief shall be calculated as below: – {para 2(iv) of Circular No.1072/05/2019-CX dated 25.09.2019}

Example: – Mr. A has confirmed demand Rs.90 lacs and pre-deposit amount is Rs.42 lacs. In this case,

Tax dues = Rs.90 Lacs

Relief = 60% of Rs.48 Lacs (Rs.90 lacs – Rs.42 lacs) = Rs.28.80 lacs

Amt payable under this scheme = Rs.48 lacs – Rs.28.80 Lacs = Rs.19.20 lacs

Note 3: – If tax dues on account of “Arrears”, tax dues less relief shall be calculated as below: – {para 2(iv) of Circular No.1072/05/2019-CX dated 25.09.2019}

Example: – Mr. A has confirmed demand Rs.95 lacs and pre-deposit amount is Rs.40 lacs. In this case,

tax dues = Rs.95 Lacs

Relief = 40% of Rs.55 Lacs (Rs.95 lacs – Rs.40 lacs) = Rs.22 lacs

Amt payable under this scheme = Rs.55 lacs – Rs.22 Lacs = Rs.33 lacs

Sec-125 – Eligible to make declaration –

(1) All the persons shall be eligible to make declaration under this scheme, except the following: –

(a) Who have filed an appeal before appellate forum and such appeal has been finally heard up to 30.06.2019.

(i) In this situation, assessee can proceed further under “arrears” category not under litigation category. Hence, there is additional 10% duty burden on declarant and relief % shall be applied on net outstanding amount (i.e. tax disputed – pre-deposit/deposits). {Para 2(viii) of Circular No.1072/05/2019-CX Dated 25.09.2019 [Para 8(5) of Form SVLDRS-1.]

(b) Who have been convicted for the matter which he intends to file declaration.

    • In this situation, assessee shall be not be able to file declaration under any category of this scheme. [Para 8(1) of Form SVLDRS-1.]

(c) Who have been issued SCN and final hearing against such SCN has taken place up to 30.06.2019.

    • In this situation, assessee can proceed further under “arrears” category not under litigation category. Hence, there is additional 10% tax burden on declarant and relief % shall be applied on net outstanding amount (i.e. tax disputed – pre-deposit/deposits). {Para 2(viii) of Circular No.1072/05/2019-CX Dated 25.09.2019 [Para 8(5) of Form SVLDRS-1]}

(d) Who have been issued SCN for an erroneous refund or refund.

    • In this situation, assessee shall be not be able to file declaration under any category of this scheme. [Para 8(4) of Form SVLDRS-1.]

(e) Who have been subjected to an enquiry, investigation or audit and amount of duty involved in such enquiry, investigation or audit has not been quantified up to 30.06.2019.

    • It can be said that if enquiry, investigation or audit is “pending” and duty amount is not quantified. HOWEVER, DOCUMENTS OR INFORMATION DURING THE COURSE OF ENQUIRY, INVESTIGATION OR AUDIT HAVE BEEN SUBMITTED, IN THIS SITUATION DECLARATION CAN BE FILED UNDER VOLUNTARY CATEGORY. It means no relief of tax, only interest or penalty will be waived. But designated committee may take a view that the provisions of section 125(1)(f) are attracted or not. “Here is the scope with the Revenue to determine”. {para 2(vi) of Circular No. 1072/05/2019-CX} and [Para 8(10) of Form SVLDRS-1.]

(f) A person making the voluntary disclosure: –

    • After being subjected to enquiry, investigation or audit or
    • Having filed a return under indirect tax enactment, wherein duty payable amount is indicated but not paid.
This scheme cannot be opted if the Voluntary disclosure is made under below situations: –

–  After being subjected to enquiry or investigation and such enquiry or investigation is yet to be started or it is at early stage.

After being subjected to audit and such audit is yet to be started or it is at early stage.

–  If return is field, where duty payable amount is indicated but it is not paid.

(g) Who have filed application before Settlement Commission for settlement of a case?

    • In this situation, assessee shall be not be able to file declaration under any category of this scheme. [Para 8(2) of Form SVLDRS-1]
    • In many cases proceedings before Settlement Commission is declined due to rejection of application or Order is not passed in time. In such a case, it will be assumed that no application has been filed and assessee may enjoy the benefits of this scheme. {Para 10(f) of Circular No.1071/4/2019-CX.8 dated 27.08.2019}.

(h) Persons seeking to make declaration with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act,

– In this situation, assessee shall be not be able to file declaration under any category of this scheme. [Para 8(3) of Form SVLDRS-1.]

(2) A declaration under sub-section (1) shall be made as per rule 3 in form SVLDRS-1.

Sec-126 – Verification of declaration by designated committee–

(1) Designated committee shall verify the declaration made by declarant in Form No. SVLDRS-1.

Proviso: – No verification shall be made in case where declarant has made voluntary disclosure in respect of duty amount.

(2) The composition and functioning of the designated committee shall be such as may be prescribed.

Sec-127 – Issue of Statement by the designated Committee –

(1) Where amount of duty payable estimated by declarant is equal to the amount estimated by designated committee (DC), within 60 days from the date of receipt of declaration, DC shall issue a statement indicating the amount payable in form SVLDRS-3.

(2) Where amount of duty payable estimated by declarant is less than the amount estimated by DC, within 30 days from the date of receipt of declaration, DC shall issue an estimate of amount payable in form SVLDRS-2.

(3) After issuance of estimation under sub section (2), the DC shall give an opportunity of being heard to the declarant before issuing a statement indicating the amount payable, if declarant desires so.

Proviso: – One adjournment may be granted to declarant by DC in respect of opportunity of being heard on the basis of sufficient cause.

(4) After hearing of declarant, within 60 days from the date of receipt of declaration, DC shall issue a statement indicating the amount payable in form SVLDRS-3.

(5) Declarant shall pay electronically through internet banking the amount payable as indicated in the statement issued by DC within 30 days from the date of issuance of statement.

(6) Where declarant has filed

– An appeal or

– A reference or

– A reply

Against SCN or Order, giving rise, to the tax dues before Commissioner (Appeals) or CESTAT, notwithstanding anything contained in any provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn.

In other words, if assessee opts this scheme for a particular case which are pending before Commissioner (Appeal)/adjudication or CESTAT, (either from the side of assessee or department) that case deemed to have been withdrawn automatically.  

(7) Where declarant has filed

– A writ petition or

– An appeal or

– A reference

Against any Order of tax dues before Any High Court of Supreme Court, declarant shall file an application before such High Court or Supreme Court for withdrawal of such writ petition or appeal or reference and after such withdrawal with the permission of the Court, declarant shall furnish proof of such withdrawal to the DC along with proof of payment referred in sub-section (5).

(iii) Further, where a departmental appeal, reference or writ petition is pending before Apex Court or High Court, department will file an application for withdrawal of such appeal, reference or writ petition after issuance of Discharge Certificate. {para 2(ii) of Circular No. 1072/05/2019-CX. Dated 25.09.2019}

(8) DC shall issue the discharge certificate in form No. SVLDRS-4 on payment of amount indicated in statement issued by DC in form No. SVLDRS-3 and production of proof, withdrawal of appeal (if applicable) within 30 days of the said payment and production of proof.

Sec-128 – Rectification of errors –

Designated committee may modify its order only to correct arithmetical or clerical error, which is apparent from the face of record, on being pointed out by declarant or suo motu within 30 days from the issuance of statement indicating amount payable.

Sec-129 –Issue of discharge certificate to be conclusive of matter and time period–

(1) Discharge certificate issued u/s 126 under this scheme shall be “conclusive” as to

– the matter and time period mentioned in said discharge certificate

and

    • 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.
    • Declarant shall not be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration.
    • Matter and time period covered under this scheme shall not be reopened under any proceedings of indirect tax enactment.

(2) Notwithstanding anything contained in sub-section (1), –

(a) No person shall contend that central excise officer has acquiesced in the decision on the disputed issue by issuing discharge certificate under this scheme.

(b) Issuance of discharge certificate with respect to a matter for a time period shall not close the issue of SCN-

      • For the same issue for the subsequent time period or
      • For the different matter for the same time period.

© In the case of voluntary disclosure, if any material particular furnished in the declaration found to be false within a period of 1 year from the date of issuance of discharge certificate, it shall be presumed that declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted.

Sec-130 –Restrictions of Scheme–

*(1) Any amount paid/payable under this scheme, –

(a) Shall not be paid through the Input tax credit;

(b) Shall not be refunded under any circumstances;

(c) Shall not be

a. Taken as input tax credit by the declarant

b. Shall not entitle any person to take input tax credit as recipient.

(2) In case pre-deposit or other deposit amount already paid exceeds the amount as indicated in statement of DC, the difference shall not be refunded.

————————————————————————————————————————————–

Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019.

Rule 3. Form of declaration u/s 125.-

(1) The declaration u/s 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.

(2) A separate declaration shall be filed for each case.

–  For every SCN (under litigation category)

–  For every Appeal pending up to 30.06.2019 (under litigation category)

–   Appeal not filed within time limit (under arrears category)

–  Order in appeal is finally heard (under arrears category)

–  A Return filed up 30.06.2019 (under arrears category)

–  Enquiry or investigation by DGGI if amount quantified up to 30.06.2019 (under investigation, enquiry or audit category)

– Enquiry or investigation by Commissioner ate if amount quantified up to 30.06.2019 (under investigation, enquiry or audit category)

–  Audit if amount quantified up to 30.06.2019 (under investigation, enquiry or audit category)

 –  Each Voluntary Disclosure (under Voluntary Disclosure category)

Para wise discussion of point no 8 of Form SVLDRS – 1

1. Have you been convicted for an offence for the matter for which this declaration is being made?

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(b)

2. Have you filed an application in the Settlement Commission for the case for which this declaration is being made?

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(g)

3. Are you seeking to make this declaration with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 (specified petroleum and tobacco products)?

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(h)

4. Are you seeking to make this declaration with respect to a show cause notice of refund/erroneous refund?

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(d)

5. Whether final hearing with regard to a matter in adjudication or appeal has taken place on or before 30.06.2019 for the matter for which this declaration is being made?

– If yes, you cannot further proceed under Litigation Category. – Sec. 125(1)(a)

– However, declaration can be made under “Arrears” Category

6. Have you been subjected to any audit under the Central Excise Act,1944 or Chapter V of the Finance Act, 1994 in respect of the goods/services or both for which this declaration is being made?

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(f)

7. Have you received any written communication from a Central Excise Officer with regard to any audit to be conducted?

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(f)

8. Have you been subjected to any enquiry or investigation under the Central Excise Act,1944 or Chapter V of the Finance Act, 1994 in respect of the goods/services or both for which this declaration is being made by way of any of the following: (a) search of premises (b) issuance of summons (c) requiring the production of accounts, documents or other evidence (d) recording of statements.

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(f)

9. Have you filed any return for the period for which declaration is being made showing the amount of duty to be payable but not having paid it?

– If yes, you cannot further proceed under this scheme. – Sec. 125(1)(f)

10. Have the tax dues with regard to the matter under enquiry, investigation or audit NOT been quantified on or before 30.06.2019?

– If yes, you cannot further proceed under investigation, enquiry or audit

– However, declaration can be made under “Voluntary Disclosure” Category.

Other points: –

1. This scheme has two components

(a) Dispute resolution – To liquidate the cases which are locked up in litigation at various stages.

(b) Amnesty – To give opportunity to the persons who have failed to discharge their tax liability correctly.

2. There will be full waiver of interest and penalty under all four categories of this scheme.

3. The case where SCN is relating to the refund or erroneous refund as well as for other outstanding dispute. In this situation, he can file the declaration for outstanding disputed demand.

4. The cases where, tax liability has been discharged by utilising CENVAT credit and matter is under dispute, in such cases tax already paid through CENVAT credit shall be adjusted accordingly.

5. If declarant doesn’t pay the amount indicated in statement issued by the designated committee within 30 days, such declaration will be treated as lapsed.

6. In case “Final Audit Report “(FAR) has been issued in the case of audit, assessee has two options

(a) Assessee pays the duty as indicated in such FAR or

(b) Doesn’t pay such duty.

In the situation (a) audit deemed to be completed after receiving the payment proof

In the situation (b) audit shall be completed after issuance of SCN.

Further, duty payable indicated in such FAR is the quantified amount and assessee may enjoy the benefits of this scheme.

7. Since the amount of arrears pertains to “a return” where amount of duty is outstanding against the declarant. Please note for the purpose of “tax relief” each return will be taken individually even though a single estimate/statement and discharge certificate is issued for such one or more returns.

8. Hon’ble Supreme Court has given interim relief to the members (lessees) of Retailers Association of India (RAI) on the condition of pre-deposit of duty. In this case members of RAI are eligible to opt this scheme {para (2(v) of Circular No. 1073/06/2019.CX dated 29.10.2019}

On other Side, burden of payment of duty has already shifted from service provider (lessors) to service recipient (lessees) vide Apex Court Order dated 14.10.2011. Hence if any appeal is pending or SCN issued to the lessors, such duty amount, which is payable by lessees, shall be reduced from the total disputed amount of the lessors.

Example: – M/s. ABC Ltd has total disputed demand of Rs.20 Crores out of which Rs.5 crores is payable by lessees directly to Govt. In such case total disputed amount for lesser will be Rs.15 crores.

9. There is little confusion/contradiction between the provisions of section 125(1) (f) (ii) and section 124(1) (c) (iii). In my opinion, it is clarified that there is no confusion/contradiction between the both. Clarification/differences are as under: –

(iv) Section 124(1)(c)(iii)

a. It should be read with section 121(c)(iii).

b. It is purely relating to the “amount in arrears”

c. If we read section 124(1)(c), it only talks about the amount in arrears.

d. Hence it is applicable on those returns which are filed up to 30.06.2019.

(v) Section 125(1)(f)(ii)

a. Section 125(1)(f) is for persons who are making voluntary disclosure.

b. Its absolute meaning that returns are filed only after introducing such scheme (i.e. after 30.06.2019)

c. Even though it is not clearly mentioned in such section but when we read whole section, it becomes clear as under

Provisions of Section 124(1) (c) (iii) apply when returns are filed up to 30.06.2019 and assessee can enjoy the benefits of this scheme under “amount in arrears” category.

Provisions of Section 125(1) (f) (ii) apply on those assessee who have filed return after 30.06.2019 and they cannot enjoy the benefits of this scheme even under the voluntary disclosure category. In this case assessee has to pay full amount of duty, applicable interest or penalty.

Disclaimer: –

– Views expressed in the Article are the personal views of the Author based on his interpretation of Law.

– Views expressed should not be construed as professional advice or legal opinion.

– Article needs to be revised and revisited on any clarifications, circulars or notifications released after the date of article.

– The author will not be responsible for any error, omission, commission and result of any action taken by a participant or anyone on the basis of this presentation.

Author Bio

Qualification: CA in Practice
Company: LNG & Associates
Location: GURGAON, Haryana, IN
Member Since: 20 Nov 2019 | Total Posts: 2
Myself CA. Lalit Gupta, Partner at M/s. LNG & Associates, Chartered Accountants. I am in Practice since last 5 years. View Full Profile

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