20 Nov 2019

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 has been made effective from 1 September, 2019. As per the said scheme, a person can liquidate legacy cases of Central Indirect Tax Acts locked up in litigation at various forum through this scheme. The scheme is also aimed to give an opportunity to those who have failed to correctly discharge their tax liability.

This scheme is a one-time opportunity to close the legacy disputes and provides for voluntary disclosure of unpaid tax liability. All pending disputes should be evaluated in order to take a rational decision whether to opt for this scheme or not. Particularly, cases where demands are less than INR 50 lakhs or cases where the assessee’s chances of success is low, this scheme appears to be beneficial considering the time and cost involved in the litigation. At the same time, where the case involves an ‘industry issue’ or where assessee’s chances of success are relatively more, the decision to opt for this scheme may differ.

Snapshot of the same has been captured below.

 

RELIEF AVAILABLE UNDER THE SCHEME

  Relief Available
 

Tax Dues Relatable To

Case A [Amount of Duty =

50 Lakh or Less]

Case B [Amount of Duty =

More Than INR 50 Lakh]

Show cause notice (SCN) / appeal pending as on 30.06.2019 70% 50%
SCN issued only with respect to late fee/ penalty, and tax amount is paid or NIL Entire Amount of Late Fee/Penalty
Amount relating to arrears of tax or amount indicated in returns but not paid 60% 40%
Enquiry/ investigation/ audit and amount quantified on or before 30.06.2019 70% 50%
Voluntary Disclosure No Relief for Tax Due. Relief of Penalty & Interest would be available.

PERSONS ARE WHO ELIGIBLE UNDER THE SCHEME

All persons shall be eligible to make a declaration under this Scheme except the following:

  • who have filed an appeal before the appellate forum and such appeal has been heard finally on or before the 30-06-2019;
  • who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration;
  • who have been issued a SCN, under indirect tax enactment and the final hearing has taken place on or before the 30-06-2019;
  • who have been issued a SCN under indirect tax enactment 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 30-06-2019;
  • a person making a voluntary disclosure, —
    • after being subjected to any enquiry or investigation or audit; or
    • having filed a return under the indirect tax enactment, 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,

 

VITAL ASPECTS OF THE SCHEME

  • It will be a fully automated scheme with a dedicated portal (cbic-gst.gov.in) for online filing of declaration and communication of final decision.
  • There are fixed timelines for various processes involved which are to be strictly adhered to, so that the entire process of filing of declaration and to make payment within 90 days.
  • A discharge certificate will be issued indicating a full and final closure of the proceedings in question for both the Department and the Taxpayer. No matter and time period covered under a discharge certificate shall be reopened in any other proceedings under the respective indirect tax enactments.
  • However, issue of a discharge certificate does not prevent issuance of a SCN for the same matter for a subsequent period or for a different matter in the same period. At the same time, a declaration under this Scheme will not be a basis for assuming that the declarant has admitted the position and no fresh SCN will be issued merely on that basis.
  • Any amount paid under this Scheme shall not be paid through the input tax credit account under the indirect tax enactment or any other Act;
  • Any amount paid shall not be refundable under any circumstances;
  • Any amount paid shall not be taken as input tax credit under the indirect tax enactment or under any other Act;
  • Any amount paid shall not entitle any person to take input tax credit, as a recipient, of the excisable goods or taxable services, with respect to the matter and time period covered in the declaration;

In case any pre-deposit or other deposit already paid exceeds the amount payable under this scheme, the difference shall not be refunded