With the introduction of Goods and Service Tax (GST) in the year 2017, many central as well as state indirect taxes were subsumed in GST. Simply stating that at central level, amid others, central excise and service tax were subsumed into GST whereas at State level, taxes such as VAT, luxury tax, entertainment tax etc. were subsumed into GST. One may note that though the various indirect taxes have been subsumed into one GST, but however, the litigations or disputes relating to the erstwhile indirect taxes such as Central Excise, Service Tax, VAT etc. are still pending adjudication at various original and appellate adjudicating authorities like CESTAT, Settlement Commissions etc. spread across the country. In such litigations which are pending adjudication, lakhs of crores of amount of tax is blocked. To realize such a whopping amount and to put an end to these uncountable litigations, the Government has brought up an amnesty scheme called Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 as announced by the Finance Minister, Smt. Nirmala Sitharaman in her budget speech this year aiming to generate an amount of approximately Rs. 3.75 lakh Crore. The salient features of Sabka Vishwas Scheme are discussed below:-
Objective
- To provide an opportunity for liquidation of past disputes of Central Excise and Service Tax as well as for voluntary disclosure by non-compliant taxpayers.
Cases covered under the Scheme
- A show cause notice or appeals arising out of a show cause notice pending as on the 30th day of June, 2019;
- An amount in arrears;
- An enquiry, investigation or audit where the amount is quantified on or before the 30th day of June, 2019; and
- A voluntary disclosure.
Exclusions from the Scheme
- Cases in respect of excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 (this includes tobacco and specified petroleum products);
- Cases for which the taxpayer has been convicted under the Central Excise Act, 1944 or the Finance Act, 1944
- Cases involving erroneous refunds; and
- Cases pending before the Settlement Commission.
Benefits under the Scheme
- Total waiver of interest, penalty and fine;
- Immunity from prosecution;
- Cases pending in adjudication or appeal, a relief of 70% from the duty demand if it is ₹ 50 Lakh of less and 50% if it is more than ₹ 50 Lakh;
- The same relief for cases under investigation and audit where the duty involved is quantified on or before 30th June, 2019;
- In case of an amount is in arrears, the relief offered is 60% of the confirmed ‘duty’ amount if the same is ₹ 50 Lakh or less and it is 40% in other cases; and
- In cases of voluntary disclosure, the declarant will have to pay full amount of disclosed duty.
Other features of the Scheme
- Facility for adjustment of any deposits of duty already made;
- Settlement dues to be paid in electronically only and cannot be availed as input tax credit later;
- 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 be treated as a precedent for past and future liabilities;
- Final decision to be communicated within 60 days of application;
- No final decision without an opportunity for personal hearing in case of any disagreement; and
- Proceedings under the Scheme will be fully automated.
Conclusion
The amnesty scheme of ‘Sabka Vishwas’ is nevertheless a great opportunity for the concerned taxpayers who wish to put an end to the tax litigation and settle with the government. Not only the litigants, this amnesty scheme also benefits those who have not disclosed their tax liabilities by making a voluntary disclosure and thereby secure themselves from penal actions of government. The scheme shall be in operation from 1st September, 2019 to 31st December, 2019.
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