Updates to Sabka Vishwas Scheme

Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 has been introduced to settle the massive outstanding litigation. The Scheme intends to free both taxpayer and department from the burden of litigation and investigation pending under old taxes which are now subsumed into Goods and Service Tax, i.e. GST. The Central Board of Indirect Taxes and Customs, vide notification no. 04/2019 Central Excise-NT dated 21

st August 2019, announced 1st September 2019 as the date from which the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 shall come into force. To educate and encourage more and more taxpayer to avail benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, recently, on 27th August 2019 circular no. 1071/4/2019-CX.8 was issued. In the said circular the Central Board of Indirect Taxes and Customs explained the advantages of the Scheme and also clarified various points, which are taken up and described in the present article. The latest notification dated 25th September 2019 is presented below:

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Advantage of the Scheme

Broad coverage of the Scheme

The Scheme covers almost all the types of pending cases, including the call bookcases. Only the following few cases are excluded from the

Scheme:

- Goods that are still subject to central excise levies like petroleum products and tobacco.
- Cases, wherein, the taxpayer has already found guilty in the court of law.
- Cases under litigation or adjudication, wherein, the final hearing has already taken place on or before 30th June 2019.
- Cases relating to refund or erroneous refunds.
- Cases pending before the settlement commissions.

Except for the exclusion list provided above, all the cases are covered under the Scheme.
An advantage for the small taxpayer:
The Government, through Sabka Vishwas Scheme, tries to focus more on the small taxpayer by providing higher relief with regard to cases involving lesser duty.
The scheme is fully automated:

To ensure complete transparency, speed and accountability, the Sabka Vishwas Scheme is fully computerized.

The declarant can file the declaration online using the portal. Even the final decision would also be communicated online.
Full and final closure of the proceedings:

The ‘discharge certificate’ shall be issued as a token of full and final closure of the proceedings. The matter and the time period stated in the ‘discharge certificate’ shall be conclusive and the declarant shall not be liable to pay any additional duty, penalty or interest. Re-opening of the matter and the time period covered under the ‘discharge certificate’ is not permissible.

Important clarification worth noting

Various clarification concerning provisions of the Finance (No.2) Act, 2019 has been provided under the circular which are explained hereunder:

There may be a situation, wherein, the single taxpayer might have been involved in multiple outstanding disputes. Out of such multiple outstanding disputes, some may be covered under the Scheme and some may not be covered under the Scheme.
For such a situation, it has been clarified that the restriction is on the ‘case’ and not the ‘taxpayer’. Meaning thereby that the taxpayer can file the declaration under the Scheme for disputes which are covered, even though some of the other disputes of the same taxpayer are not covered under the Scheme.
Section 124(2) and section 130(2) refers to an adjustment of any amount paid as pre-deposit at any stage of appellate proceedings or as a deposit at the time of enquiry, audit or investigation.
It has been clarified that if such amount is paid by utilizing the input tax credit, then, such tax paid through input tax credit shall be adjusted by the Designated Committee while determining the final amount payable under the Scheme.
Cases which are pending before the Settlement Commission are not eligible for the Scheme, however, it has been clarified that the cases which are outside the purview of the Settlement Commission shall be covered under the Scheme.
Further, any pending reference, appeals or writ petition filed against or any arrears emerging out of the orders of the Settlement Commission is also eligible under the Scheme.
Section 2(r) covers the definition of the term ‘quantified’ which means a written communication of the amount of duty payable under the indirect tax enactment.
With this, it has been clarified that such ‘written communication’ shall include a letter indicating duty demand or duty liability admitted by the person during enquiry, audit, investigation or audit report.
The declarant needs to pay the amount indicated in the Statement as issued by the Designated Committee within 30 days. It has been clarified that if the declarant fails to pay the amount within a period of 30 days, then, such a declaration will be treated as lapsed.

The official notification on 27th August 2019 is provided below:

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Frequently Asked Questions

Common questions about Updates to Sabka Vishwas Scheme.

The Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 is a scheme introduced by the Government of India to settle outstanding litigation related to legacy indirect tax disputes that have been subsumed under the Goods and Services Tax (GST). The scheme aims to provide a mechanism for resolving long-pending disputes and freeing both taxpayers and the government from the burden of litigation and investigation under old tax laws.

The Sabka Vishwas Scheme offers several advantages, including broad coverage of almost all types of pending cases, higher relief for small taxpayers with cases involving lesser duty, a fully automated and transparent process, and full and final closure of proceedings through the issuance of a discharge certificate. It also aims to provide a hassle-free and cost-effective way to settle disputes.

The Sabka Vishwas Scheme excludes cases related to goods that are still subject to central excise levies (like petroleum products and tobacco), cases where the taxpayer has already been found guilty in court, cases where the final hearing has already taken place before June 30, 2019, cases related to refunds or erroneous refunds, and cases pending before the settlement commissions.

Yes, the circular clarifies that the restriction is on the 'case' and not the 'taxpayer'. This means that a taxpayer can file a declaration under the Scheme for disputes that are covered, even if some of their other disputes are not eligible for the Scheme.

If any amount has been paid as a pre-deposit or deposit during appellate proceedings, enquiry, audit, or investigation by utilizing the input tax credit, such tax paid through input tax credit will be adjusted by the Designated Committee while determining the final amount payable under the Scheme.

No, cases that are pending before the Settlement Commission are not eligible for the Sabka Vishwas Scheme. However, cases outside the purview of the Settlement Commission, as well as any pending references, appeals, or writ petitions filed against or arrears emerging from the orders of the Settlement Commission, are eligible under the Scheme.

If the declarant fails to pay the amount indicated in the Statement issued by the Designated Committee within 30 days, the declaration will be treated as lapsed.

The term 'quantified' refers to a written communication of the amount of duty payable under the indirect tax enactment. This includes a letter indicating the duty demand or duty liability admitted by the person during enquiry, audit, investigation, or an audit report.

Yes, the Sabka Vishwas Scheme is fully automated to ensure complete transparency, speed, and accountability. The declarant can file the declaration online using the portal, and the final decision will also be communicated online.

The discharge certificate issued under the Sabka Vishwas Scheme signifies the full and final closure of the proceedings. The matter and time period covered under the discharge certificate are conclusive, and the declarant will not be liable to pay any additional duty, penalty, or interest. Re-opening of the matter and time period covered under the discharge certificate is not permissible.