Article on “Sabka Vishwas (Legacy Dispute Resolutions) Schemes 2019” by CMA Ashok Nawal, Founder, Bizsolindia Services Pvt. Ltd

Hon Finance Minister Smt. Nirmala Sitharaman had announced SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 for unblocking Rs. 3.85 Lacs Cr in pending litigation relating to Excise & Service Tax etc. at various levels from SCN stage to adjudication pending upto Supreme Court. Date has been notified for start of the scheme and rules are notified vide Notification No. 4 & 5 of Central Excise (NT) dtd. 21.08.2019. The scheme will start from 1st Sept 2019 and end on 31st Dec 2019, during which declaration needs to be filed to claim the benefit under the scheme.

Scheme will be applicable to any pending amount relating to :

  1. the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or Chapter V of the Finance Act, 1994 and the rules made thereunder;
  2. the following Acts, namely:—

(i) the Agricultural Produce Cess Act,1940;

(ii) the Coffee Act, 1942;

(iii) the Mica Mines Labour Welfare Fund Act, 1946;

(iv) the Rubber Act, 1947;

(v) the Salt Cess Act, 1953;

(vi) the Medicinal and Toilet Preparations (Excise Duties) Act, 1955;

(vii) the Additional Duties of Excise (Goods of Special Importance) Act, 1957;

(viii) the Mineral Products (Additional Duties of Excise and Customs) Act, 1958;

(ix) the Sugar (Special Excise Duty) Act, 1959;

(x) the Textiles Committee Act, 1963;

(xi) the Produce Cess Act, 1966;

(xii) the Limestone and Dolomite Mines Labour Welfare Fund Act, 1972;

(xiii) the Coal Mines (Conservation and Development) Act, 1974;

(xiv) the Oil Industry (Development) Act, 1974;

(xv) the Tobacco Cess Act, 1975;

(xvi) the Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Cess Act, 1976;

(xvii) the Bidi Workers Welfare Cess Act, 1976;

(xviii) the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978;

(xix) the Sugar Cess Act, 1982;

(xx) the Jute Manufacturers Cess Act, 1983;

(xxi) the Agricultural and Processed Food Products Export Cess Act, 1985;

(xxii) the Spices Cess Act, 1986;

(xxiii) the Finance Act, 2004;

(xxiv) the Finance Act, 2007;

(xxv) the Finance Act, 2015;

(xxvi) the Finance Act, 2016;

 

(c) any other Act, as the Central Government may, by notification in the Official Gazette, specify. 

  • This Scheme will be applicable to any person who is liable to pay central excise, service tax or any cess under the act so specified. registered for any amount in arrears on account of:
  • Appeal to be filed or not filed against any order
  • Order in appeal, which attained the finality
  • Admitted tax Liability but not paid till 30th June 2019 and Tax dues
  • Tax Dues Means?
    • Total duty disputed in appeal pending as on 30th June 2019
    • Total duty disputed by the department when appeal filed by the department
    • Duty demanded in the Show Cause Notice as on 30th June 2019
    • Duty demanded in Audit Report
    • Duty admitted but not paid
    • Duty Arrears
  • Relief:

Relief has been provided under the scheme to pay certain duty on withdrawing all the litigations and get the relief of specified amount of duty demanded, which has been given in the following table, needless to say , when duty demand and penalty is also levied, if such person opt for the scheme and pays specified duty, he gets the relief of balance duty and penalty also.

Particulars Duty Required to be paid Relief
Show Case Notice or Appeals as on 30th June 2019 Rs. 50 Lacs or less 30% 70%
Show Case Notice or Appeals as on 30th June 2019 More than Rs. 50 Lacs 50% 50%
Show Case Notice for Late Fees Any Amount 0% 100%
Amount of arrears Rs. 50 Lacs or less 40% 60%
Amount of arrears More than Rs. 50 Lacs 50% 50%
During Audit / Investigation Rs. 50 Lacs or less 30% 70%
During Audit / Investigation More than Rs. 50 Lacs 50% 50%
  • Amount paid during investigation or as a deposit to be deducted from the total tax to be paid
  • If such amount is more than amount to be paid, no refund to be granted

 Ineligibility:

  • Appeals which has been finally heard
  • Person who has convicted for offense for the matters he intends to file the declaration
  • Show Cause Notice for which final hearing is heard
  • Audit / investigation where amount is not quantified
  • The person after being subjected to any enquiry or investigation or audit or person files the return but not paid
  • Person who has filed application before settlement commissioner
  • Good falling under forth schedule of Central Excise Act 1944

Procedure:  

  • Any person opting for the scheme has to file the declaration in Form SVLDRS-01, which contains basic information of declarants, questionnaire and detailing to elicit. The category of application, namely, Litigation, Arrears, Investigations, Enquiry or Audit and Voluntary Disclosure. Proceedings under the Scheme will be fully automated.
  • Facility for adjustment of any deposits of duty already made
  • Separate declaration to be filed for each case separately and same is required to be filed electronically only.
  • The declaration needs to be filed during 1st Sept 2019 to 31st December 2019 against the liability demanded or under litigation as on 30th June 2019.
  • Designated Committee will be constituted which will be on the basis of monetary limits.
  • Designated Committee will verify the declaration as stated and check pending duty demand as on 30th June 2019 and thereafter to issue the statement in the form SVLDRS-2.
  • After receipt of the statement, declarant will file Form SVLDRL-2A informing agreement with the statement or otherwise.
  • Designated Committee will go through SVLDRS-2A and notice of personal hearing will be issued, if there is disagreement in the Form SVLDRS-2B.
  • Designated Committee will issue its findings / decisions in Form SVLDRS-3. Final decision to be communicated within 60 days of application.
  • Amount to be paid electronically in cash and to be informed to designated committee electronically. There will be automatic link for duty payment. It is to be noted that No input tax credit / Cenvat credit will be allowed of such amount paid. At the same time, documents upload facility is also provided for proof of withdrawal of cases and is required to digitally signed.
  • Discharge Certificate to be issued by the Designated Committee in Form SVLDRL-4. A full and final closure of the proceedings in question. The only exception is that in case of voluntary disclosure of liability, there is provision to reopen a false declaration within a period of one year.
  • Proceedings under the Scheme shall not treated as a precedent for past and future liabilities
  • Rectification of errors can be done within 30 days of issue of statement

 Immunity after Discharge Certificate:

  • Further duty, interest, penalty
  • Prosecution
  • No re-opening the statement
  • No Appeal
  • No Input Tax Credit
  • Rules to be notified

Introduction of this scheme is the most welcome step to reduce from number of litigations and get the relief. Every taxpayer has to introspect, and re-visit all pending litigations and determine for opting under the scheme for such cases, where there are little bit chances also to lose.

It is the golden opportunity for each taxpayer to minutely study existing disputes including arrears, litigations and opt for the scheme.

 

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