Sabka Vishwas (Dispute Resolution) Scheme 2019

Sabka Vishwas (Dispute Resolution) Scheme 2019

Sabka Vishwas (Dispute Resolution) Scheme 2019

The Finance Minister of India, Smt. Nirmala Sitharaman, declared the Legacy Dispute Resolution Scheme/Sabka Vishwas Scheme while presenting the Union Budget of 2019. The Scheme serves dual functionality. It serves as a dispute resolution as well as an amnesty scheme. This Scheme is introduced to resolve and settle legacy cases of the Central Excise and Service Tax. The proposed scheme would cover all the past disputes of taxes which may have got subsumed in GST; namely Central Excise, Service Tax and Cesses. Therefore, this Scheme has been developed on the sidelines of previous schemes under direct and indirect taxes. This article talks about the Legacy Dispute Resolution Scheme in detail.

Overview

The Legacy Dispute Resolution Scheme was declared as a dispute resolution cum amnesty scheme. The scheme is bought about for the resolution of legacy disputes related to Central Excise, Service Tax and Cesses, which were all absorbed by the Goods and Services Tax (GST) in 2017. While offering relief of a certain percentage from tax dues, the Scheme provides for waiver of interest and penalty as well. The rate provided as relief may range anywhere from 40% to 70%. Furthermore, the declarant will not be liable to any prosecution for the matter.

However, it should be noted that where the taxes are due and payable on account of voluntary disclosure by the declarant, relief shall not be available with respect to the tax dues. The Finance Bill of 2019 states that every person will be able to make a declaration under this Scheme with a few exceptions. It also mentions that any amount paid under this Scheme cannot be paid through the input tax credit account and will not be refundable under any given circumstances. The provisions of the Scheme also states that such an amount paid will not be available as an input tax credit.

Applicability of the Scheme

The Sabka Vishwas (Dispute Resolution) Scheme 2019 applies to disputes pending under the following Acts:

  • The Central Excise Act and the Rules made thereunder;
  • The Central Excise Tariff Act, 1985;
  • Chapter V – the Finance Act, 1994 (i.e., Service Tax) and the rules made thereunder;
  • The list of other Acts covered under the Scheme are:
    • The Coffee Act
    • The Tea Act
    • The Rubber Act
    • The Agricultural Produce Cess Act
    • The Salt Cess Act
    • The Mica Mines Labour Welfare Fund Act
    • The Sugar (Special Excise Duty) Act
    • The Sugar Export Promotion Act
    • The Sugar (Regulation of Production) Act
    • The Additional Duties of Excise Act
    • The Produce Cess Act
    • The Mineral Products (Additional Duties of Excise & Customs) Act
    • The Medicinal & Toilet Preparations (Excise Duties) Act
    • The Textile Committee Act
    • The Oil Industry (Development) Act
    • The Industries (Development and Regulation) Act
    • The Coal Mines (Conservation & Development) Act
    • The Limestone Labour Welfare Fund Act 
    • The Dolomite Mines Labour Welfare Fund Act
    • The Tobacco Cess Act
    • The Bidi Workers Welfare Cess Act
    • The Jute Manufacturers Cess Act
    • The Spices Cess Act
    • The Agricultural & Processed Food Products Export Cess Act
    • The Finance Act, 2001
    • The Finance Act, 2004
    • The Finance Act, 2005
    • The Finance Act, 2007
    • The Finance Act, 2010
    • The Finance Act, 2015
    • The Finance Act, 2016
    • The Iron Ore Mines, Manganese Ore Mines, Chrome Ore Mines Labour Welfare Cess Act
    • The Additional Duties of Excise Act

Ineligibility of Scheme

All persons are eligible to make an application under this scheme, except the following are:

  • Any person who has filed an appeal with the appellate forum and such appeal has been heard finally on or before June 30th, 2019.
  • Any person who was convicted for any offence punishable under the provision of Indirect Tax Enactment for which the declaration also been filed by him.
  • Any person who has been provided with a show-cause notice under the provision of Indirect Tax Enactment for a refund.
  • Any person who has been subjected to audit or investigation or enquiry and the amount of duty involved in the audit or enquiry or investigation has not been quantified on or before June 30 2019.
  • Any person making voluntary disclosure on:
    • After being subject to audit or investigation or enquiry.
    • Having filed return under the provision of Indirect Tax Enactment in which the person is indicated to an amount of duty payable, but has not paid.
  • Any person who has filed an application in settlement commission for the settlement of a case.
  • Any person seeking to make declarations to goods set forth in the fourth schedule to the Central Excise Act. The following goods fall within the fourth schedule to the Central Excise Act,
    • Unmanufactured Tobacco, Tobacco refuse
    • Cigars, cigarillos and cigarettes, cheroots of tobacco or tobacco substitutes.
    • Other manufactured tobacco and manufactured tobacco substitutes.
    • Petroleum oils and oils obtained from minerals, crude.
    • Petroleum gases and other gaseous hydrocarbons.

Relief under the Scheme

The relief offered under the Scheme shall be computed based on the amount of tax dues determined. The following table depicts the same:

Stage of DisputeTax Dues/Amount for Resolution
Appeal(s) arising out of an order (out of adjudication and appellate proceedings)Total tax being disputed in all appeal(s) put together (whether by the taxpayer or the Revenue) against a given order.
SCN receivedTax stated to be payable as per the notice.
Enquiry/Investigation/AuditTax quantified in such enquiry/investigation/audit.
Arrears, defined as liabilities admitted in return but unpaid or confirmed in an appellate proceeding, which cannot be appealed against due to time limitation.Tax in arrears

It should be noted that the relevant stage of dispute or pendency thereof in this context would be examined as of the 30th of June, 2019 for eligibility under the Scheme.

Determination of Tax Relief

The rates for tax relief under this Scheme are as follows:

Where Tax Dues Relatable toSize of Tax DuesTax Relief
An SCN or one/more appeals arising out of such noticeMore than INR 0.5 Crore50% of the Tax Dues
INR 0.5 Crore or less70% of the Tax Dues
SCN for a late fee or penalty only with underlying tax/duty demand either being fully paid already or being NILAnyEntire amount of late fee and/or penalty, as the case may be
Arrears (as reported in the return)More than INR 0.5 Crore40% of the Tax Dues
INR 0.5 Crore or less60% of the Tax Dues
Arrears – othersMore than INR 0.5 Crore40% of the Tax Dues
INR 0.5 Crore or less60% of the Tax Dues
Enquiry or Investigation or AuditMore than INR 0.5 Crore50% of the Tax Dues
INR 0.5 Crore or less70% of the Tax Dues

NOTEAny amount already paid by the declarant as deposit or pre-deposit in appellate proceedings or in the course of enquiry/investigation/audit would be adjustable towards sums payable by the declarant. However, where such previously paid amounts exceed the amount payable after considering the tax relief, no refund of such amount would be allowed.

Forms under the Scheme

The various forms covered under the Sabka Vishwas (Dispute Resolution) Scheme are tabulated below:

S.NoForm NoPurpose

1.

SVLDRS-1

For the declaration by a declarant

2.

SVLDRS-2

For the notice to the declarant

3.

SVLDRS-2A

For the written submissions, wavier of personal hearing and adjournment

4.

SVLDRS-2B

For the intimation of personal hearing after adjournment

5.

SVLDRS-3

For a statement of amount payable issued by the designated committee

6.

SVLDRS-4

For obtaining discharge certificate for full and final settlement of tax dues

Procedural Aspects

The following are the steps that are involved while availing the benefits of the Legacy Dispute Resolution Scheme.

  • Declaration for seeking relief shall be made electronically in a prescribed manner.
  • All declarations will be examined by a designated committee, to be constituted, for the purpose of finalising the amounts payable by the declarant to avail the relief under the Scheme.
  • Where the designated committee’s estimates of the amount payable exceed the estimates made by the declarant, then the declarant would be given an opportunity of being heard before the amount payable is finalised.
  • The designated committee, upon finalising the amounts payable by the declarant, would issue a statement in this regard.
  • Adjudication/appellate proceedings concerning the matters covered by the declaration up to the Tribunal stage would be deemed withdrawn; while proceedings pending before the High Court and Supreme Court will have to be withdrawn through a written application in this regard.
  • The relief under the Scheme would be confirmed by way issuance of a discharge certificate once the declarant evidences the payment of the amount as per designated committee’s statement and the withdrawal of proceedings before the High Court and the Supreme Court.
  • Timelines for all actionable items by the designated committee and the declarant are also prescribed.
  • Any amount paid under the Scheme will neither be refunded nor be recovered in the form of input tax credit or in any form for that matter.
  • The tax dues cannot be paid through the utilisation of input tax credit.
  • Other administrative and procedural contours of the Scheme including without limitation start and end date of the scheme, manner of declaration and verification, constitution and functioning of the designated committee, and more, would be prescribed in due course of time.

Issuance of Discharge Certificate

The following are the effects of issuance of the Discharge Certificate.

  • No further payments of any amount by way of tax/duty, interest and penalty will be applicable.
  • No further proceedings and prosecutions will take place.
  • No re-opening of the matter under any circumstances.
  • However, the above consequences would be limited cumulatively to the matters and the time-period covered by the declaration under the Scheme.

Other Specifics

The scheme also discusses scenarios of voluntary disclosures. However, the scope of the Scheme qua voluntary disclosures and its overlap over other items need to be re-looked due to ambiguity and uncertainty. Without this aspect, at an in-principle level, for voluntary disclosures, there would not be any tax relief, but other benefits under the Scheme may be available. Moreover, a person making a voluntary disclosure would not be eligible for Scheme if the individual:

  • Is attempting to avail the benefits of the Scheme after being subjected to any enquiry, investigation or audit.
  • Has indicated the amount under a filed return but has not paid it.

Recent Clarifications

As per the circular from the Ministry of Finance on 16th December 2019, few clarifications raised by the trade sector are addressed. The circular (Circular No.1074/07/2019-CX) dated 16th December 2019 can be found below:

Recent-Clarifications-on-SVLDR_161219

 

  • Section 122(c) specifying seven more enactments into the SVLDR scheme apart from Sections 122(a) & (c) and they are:
    • Cine-Workers Welfare Cess Act, 1981(30 of 1981)
    • Industries(Development and Regulation) Act, 1951 (65 of 1951)
    • Sugar Export Promotion Act, 1958 (30 of 1958)
    • Sugar (Regulation of Production) Act, 1961 (55 of 1961)
    • Tea Act, 1953 (29 of 1953)
    • Finance Act, 2001 (14 of 2001)
    • Finance Act, 2005 (18 of 2005)
    • Finance Act, 2010 (14 of 2010)

Notification on this can be accessed from the below:

SVLDR-Applicable-041219

 

Also, there are few clarifications on following Sections are clarified in this notification:

  • Section 124(2) – Deposits can be adjusted or deducted
  • Section 130(2) – Differential amount on deposit and amount payable
  • Section 10(1) – The effective date of SVLDR is 01-07-2019 as the originally notified date of 30-06-2019 was a public holiday
  • Rule 3 of SVLDR Rules, 2019 – More provisions to declare the taxpayers’ statement (cases)
  • PAN of taxpayers – Not mandatory
  • Effective date – Whatever submitted after 01-07-2019 can be treated as “arrears”
  • Section 129 – Differences in declaration can be dealt separately

Latest Notification 

As per the latest Notification (Notification No.07/2019 Central Excise-NT) dated on 31st December 2019, the due date has been extended by fifteen days to 15th January 2020. The official notification can be found below:

SabkaVishwas-Extension

 

As per the latest Notification No.1074/07/2019-CX dated on 16th December 2019, the have been made the following announcement.

According to this notification, Central Board of Indirect Taxes and Customs (CBIC) has stated that there will be no extension for Sabka Vishwas Scheme, 2019 after December 31, 2019.  In a Circular issued by CBIC notified that all the eligible declarants could avail the benefit of the scheme and finalize their pending cases by paying concessional amounts on or before December 31, 2019. Also, it offers both taxpayers and Department an opportunity to settle past cases under Central Excise and Service Tax.

instruction_dated_1612 (1)

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