INTRODUCTION
With the advent of the much talked about reform i.e., Goods & Service Tax (popularly known as ‘GST’), we have seen a colossal overhaul in the indirect taxation system of the nation. The Government has taken a top-down approach in its implementation and has positively addressed the teething difficulties faced by the Industry. Experts might be divided in their opinion about the impact of this monumental legislation, but, one thing is apparent, that the Modi 2.0 Government is moving ahead with its reform agenda at a much faster pace.
In endurance with the Hon’ble Prime Minister’s reform agenda, the Hon’ble Minister of Finance, Mrs. Nirmala Sitharaman in her maiden budget speech has announced the “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019”. Find below the relevant excerpts of her speech:
“141. GST has just completed two years. An area that concerns me is that we have huge pending litigations from pre-GST regime. More than 3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow business to move on. I, therefore, propose, a Legacy Dispute Resolution Scheme that will allow quick closure of these litigations. I would urge the trade and business to avail this opportunity and be free from legacy litigations”
(Source: The Budget Speech on July 05, 2019 in the Lok Sabha)
Therefore, this scheme is a dispute resolution cum amnesty scheme aimed at the resolution and settlement of legacy cases primarily in central excise and service tax amounting to Rs. 3.75 lakh crores approximately. Let us analyse the details of the scheme as mentioned in the chapter V of the Finance (No. 02) Act, 2019 read with relevant rules as notified, as follows:
LEGISLATIONS COVERED
The scheme covers around 29 legislations which not only includes laws related central excise duty and service tax, but also the legislations related to taxes or cesses on agriculture produce, coffee, rubber, sugar, textiles, coal mines, oil, mineral products, tobacco, jute, spices, bidi workers, iron ore mines, limestone and dolomite mines etc.,
CASES COVERED
The scheme primarily covers the ‘taxes dues’ under the following scenarios:
- An appeal pending as on 30.06.2019 before the appellate forum.
- A show cause notice has been received on or before 30.06.2019.
- Pending enquiry, investigation or audit, where the amount payable has been quantified by the authorities on or before 30.06.2019.
- Voluntary disclosures.
- Amount in arrears i.e.,
- No appeal has been filed within the prescribed period.
- Order in appeal attaining finality.
- Return has been filed on or before 30.06.2019 declaring the amount payable but has not been paid.
CASES NOT COVERED
The scheme does not cover the ‘tax dues’ under the following scenarios:
- An appeal heard finally on or before 30.06.2019 before the appellate forum.
- A show cause notice has been heard finally on or before 30.06.2019.
- A show cause notice issued for refund or erroneous refunds.
- Pending enquiry, investigation or audit, where the amount payable has not been quantified by the authorities on or before 30.06.2019.
- Voluntary disclosures after any enquiry, investigation or audit.
- Matters pending before the settlement commission.
- Excisable goods like petroleum, alcohol, tobacco etc.,
- Conviction for any offence punishable under the respective legislation for which benefit of scheme to be availed.
RELIEF GRANTED
The scheme grants relief to the declarant as mentioned below:
| Scenario | Amount Involved |
Relief Available |
Amount Payable |
| Tax dues w.r.t. show cause notice or an appeal | Up to 50 Lakhs | 70% | 30% |
| Above 50 Lakhs | 50% | 50% | |
| Show cause notice only for late fee or penalties, where tax involved is paid or NIL | Any amount | 100% | 0% |
| Amount in arrears | Up to 50 Lakhs | 60% | 40% |
| Above 50 Lakhs | 40% | 60% | |
| Tax dues declared as payable in the returns but not paid | Up to 50 Lakhs | 60% | 40% |
| Above 50 Lakhs | 40% | 60% | |
| Tax dues w.r.t enquiry, investigation or audit | Up to 50 Lakhs | 70% | 30% |
| Above 50 Lakhs | 50% | 50% | |
| Voluntary disclosures | Any Amount | 0% | 100% |
|
Other reliefs: § The declarant will be immune from payment of interest and penalties. § The declarant will be immune from prosecution. § Matter under the respective time period covered under the scheme cannot be re-opened. |
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RESTRICTIONS
There are few restrictions under the scheme as follows:
- Amount under the scheme cannot be paid using the input tax credit.
- Amount paid under the scheme cannot be refunded.
- Amount paid under the scheme cannot be claimed as an input tax credit.
- No refund shall be granted in case the pre-deposit or other deposits exceeds amount payable under the scheme.
PROCEDURE TO BE FOLLOWED
The process from the stage of application to its disposal shall be fully automated on the portal i.e., www.cbic-gst.gov.in. The applications shall be disposed of by a designated committee appointed by the department. The basic procedure for applying under the scheme is as follows:
| Step 1 | The declarant shall apply in Form SVLDRS-1, separately for each case. | |
| Step 2 | If the amount assessed by the designated committee is greater than the amount declared, then it shall issue a statement with the estimate of amount payable in Form SVLDRS-2 within 30 days of receipt of application along with an opportunity for personal hearing. | If the designated committee agrees with the amount declared, then it shall issue a statement with the amount payable in Form SVLDRS-3 within 60 days of receipt of application. |
| If the applicant agrees or disagree with the estimate or intend to submit written submissions or waive personal hearing or seek adjournment, then Form SVLDRS-2A shall be filed. The designated committee may grant approval under Form SVLDRS-2B. | ||
| The designated committee after deciding the matter, shall issue Form SVLDRS-3 indicating the final amount payable by the declarant. | ||
| Step3 | Within 30 days of receipt of Form SVLDRS-3 from designated committee, the declarant shall pay the amount. | |
| Step 4 | Matters with appellate forums other than High Court or Supreme Court shall be deemed to have been withdrawn. | Matters with High Court or Supreme Court shall be withdrawn by making an application and proof is required to be submitted to the designated committee. |
| Step 5 | Within 30 days of submission of proof of payment and withdrawal of the appeal (as mentioned in step 4), the designated committee shall issue a discharge certificate in Form SVLDRS-4. | |
EFFECTIVE DATE
The scheme is effective from September 01, 2019 and declarations can be made on or before December 31, 2019.
PAYMENT OF THE TAX DUES
The payment under the scheme must be made electronically. However, the amounts paid as pre-deposit or deposits during enquiry, investigations or audit will be allowed as a deduction.
AUTHOR’S COMMENTS
Though the intent behind the scheme has been made clear by the Hon’ble Minister of Finance in her speech, the Industry is sceptical in its approach due to past experience of the litigations post Voluntary Compliance Encouragement Scheme, 2013 (popularly known as ‘VCES’) under service tax. With few un-answered questions in the scheme to be addressed, whether the scheme will be a win-win or not for the Industry and the Government, will depend on how things unfold in due course of time. However, it is suggested to make use of this once in a lifetime opportunity by paying the required amounts and putting an end to the litigations of pre-GST era once for all.
■ August 31, 2019