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Long Awaited and Vital scheme for Taxpayers...........

Practical Approach - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

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 127. 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 appeal.

o 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)

o Mr. A has filed an appeal after 30.06.2019 against an order of CESTAT, in this case-

• Mr. 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.

o 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'.

o 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.

o 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 officer.

(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 section126.

 

(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.
'tax relief' means the amount of relief granted u/s 124.

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