In theUnion Budget 2019-20, the Honourable Finance Minister Shrimati Nirmala Sitharaman announced the Sabka VishwasLegacy Dispute Resolution (SVLDR) Scheme, 2019, a one-time measure for liquidation of past disputes of Central Excise and Service Tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The scheme provides that eligible persons shall declare the unpaid tax dues and pay the same in accordance with the provisions underlaid in the scheme. The scheme also provides substantial relief in the tax dues for all categories of cases, full waiver of interest, fine, penalty, relief from additional liability of interest, fine or penalty along with amnesty from prosecution.The scheme is operationalized from 1.09.2019 and would continue till 31.12.2019.
The scheme is available to the Central Excise Act, 1944 or Central Excise Tariff Act, 1985 or chapter V of the Finance Act, 1994 and 26 other Acts and Rules made there-under.
Components of the scheme:
• Dispute Resolution
It 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.
It provides an opportunity to the taxpayers to pay the outstanding tax and be free of any other consequence under the law.
Benefits of the scheme:
The various benefits available under the Scheme are:
- Total waiver of interest and penalty
- Immunity from prosecution
- Reopening shall not be done in any other proceedings
- Final decision will not be conferred without personal hearing
- Proceedings under the applicable laws shall be started within a time limit of one year only if the declaration made under voluntary disclosure is proven false.
Relief under the scheme:
|Sub-Clause||Tax Dues relatable to (clause 122)||Relief Available (Clause 123)|
|<=50 Lacs||>50 Lacs|
|Relief||Tax Payable||Relief||Tax Payable|
|a)||Show cause Notice/Appeal||70% of Tax Dues||30% of Tax Dues||50% of Tax Dues||50% of Tax Dues|
|b)||Show cause Notice for late fee or penalty only||100% of late fee/ Penalty||NIL||100% of late fee/ Penalty||NIL|
|c)||Inquiry, Investigation, Audit Pending & Amount Quantified||70% of Tax Dues||30% of Tax Dues||50% of Tax Dues||50% of Tax Dues|
|d)||Voluntarily Disclosed||No Relief||100%||No Relief||100%|
|e)||Amount in arrears||60% of Tax Dues||40% of Tax Dues||40% of Tax Dues||60% of Tax Dues|
|Status of the matter
|Nature of Tax dues||Tax Relief|
|Tax dues of Rs. 50 lakhs or less||Tax dues of more than Rs. 50 lakhs|
|Ø Where a show cause notice has been issued and which is pending as on 30.06.2019||Duty or tax amount stated in the notice||70% of the tax dues||50% of the tax dues
|Ø Where one or more appeals arising out of a notice has been filed and the same is/are pending as on 30.06.2019||Duty or tax amount disputed in appeal|
|Ø Where both, the assessee and the department have preferred appeal against an order and which are pending as on 30.06.2019||Aggregate of duty or tax amount disputed in the appeals of the assessee and the department|
|Ø Where an enquiry, investigation or audit is undertaken and the amount is quantified on or before 30.06.2019||Duty or Tax amount quantified during such proceedings||70% of the tax dues||50% of the tax dues|
|Ø In case of amount in arrears||Duty or tax amount in arrears||60% of the tax dues||40% of the tax dues|
|Ø In case of amount indicated as payable in return but not paid by the assessee||Duty or tax amount indicated in the Return|
Apart from the above cases, scheme can also be availed in the following cases:
- A voluntary disclosure of tax liability by a registered or unregistered taxpayer.
- A co-noticee in a show cause notice or order in original who is liable to pay only penalty of fine can also apply for full waiver of the penalty if he can prove that the main notice has discharged the full liability.
Exclusions of the scheme:
- Excisable goods from Fourth Schedule to the Central Excise Act, 1944.
- Application in the settlement commission.
- Convicted for any offence for the matter for which he intends to file a declaration.
- Issued a SCN notice for erroneous refund or refund.
- Voluntary disclosure after being subjected to any enquiry or investigation or audit & filed a return, indicating duty as payable, but has not paid it.
- Subjected to enquiry or investigation or audit & duty involved has not been quantified on or before 30th June 2019.
- Issued a SCN and final hearing has taken place on or before 30th June 2019.
- Appeal before appellate forum and heard finally on or before 30th June 2019.
Restriction of the scheme:
Following restrictions have been placed under the scheme:
- a) Tax dues payable shall not be paid through input tax credit account.
- b) Tax dues paid shall not be taken as input tax credit or entitle any person to take input tax credit as a recipient of excisable goods or taxable services.
- c) Tax dues paid shall not be refundable under any circumstances.
Declaration under the scheme:
- A declaration is to be filed electronically, on or before the eligible scheme period in Form SVLDRS-1.
- On receipt of the declaration, the system will automatically generate a unique reference number.
- The designated committee shall verify the declaration submitted, based on the particulars furnished by the declarant, and reconciling the same with records that are already available within the department.
- A statement will be issued by the designated committee in Form SVLDRS-3, within a period of 60 days from the date of receipt of the declaration, with the particulars of the amount payable. If the amount payable is nil, and there is no appeal pending in either a High Court or the Supreme Court, then this statement will not be issued.
- Actions by designated committee:
- In cases where the estimated amount payable turns out to be more than what has been declared by the declarant, then the designated committee should issue an estimate of the amount payable in Form SVLDRS-2 within 30 days of the receipt of the declaration. This wouldinclude an opportunity for a personal hearing.
- If the declarant wishes to agree or disagree with the estimate calculated by the designated committee, to make any written submission, to waive the personal hearing, or to seek an adjournment, an application in Form SVLDRS-2A shall be made indicating the same.
- If the above form has not been filed, or if the declarant does not appear before the designated committee on the appointed date, then the committee will make its decision based on the records available.
- The designated committee will have the power to modify its order and issue a revised Form SVLDRS-3 to correct an arithmetical or clerical error, which is apparent on the face of record. The modification has been done within 30 days of issuing the original Form SVLDRS-3.
- The declarant is supposed to pay the amount indicated in Form SVLDRS-3, within 30 days from the date of its issue.
- Once the designated committee has been satisfied that the declarant has paid the amount in full, it will issue a discharge certificate in Form SVLDRS-4 within 30 days of payment being made.
Things to remember:
- Separate declaration needs to be filed for each case to be resolved.
- When applicable, proof of withdrawal of the appeal or writ petition filed before a High Court or Supreme Court needs to be furnished by the declarant.
- The verification by designated committee shall not be done in cases of voluntary disclosure.
Payment under the scheme:
A challan can be generated by a link provided in the Form SVLDRS-3 issued by the department. Once the challan is generated, payment against the same can be made by the taxpayer.
With Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, Indian government is looking forward to liquidate the huge outstanding litigation and free the tax payers from the burden of litigation and investigation under the legacy taxes.
This content is meant for information only and should not be considered as an advice or opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
CA Mitika Batta
AKGVG & Associates