Sabka Vishwas(Legacy Dispute Resolution) Scheme,2019

Sabka Vishwas(Legacy Dispute Resolution) Scheme,2019

Objective of the Scheme:

  • The Union Budget,2019 proposed The Sabka Vishwas(Legacy Dispute Resolution) Scheme,2019 and introduced to resolve all disputes relating to the erstwhile service tax and central excise acts, which are now subsumed under GST, as well as 26 other indirect tax enactments. 
  • This scheme will provide a certain relief including penalty, interest or any other proceedings including prosecution to taxpayers who wish to close their pending dispute. 
  • The Scheme aims to resolve nearly 1.5 lakh cases involving an amount of Rs. 3.75 lakh crore pending before Commissioner(Appeals), CESTAT, High Courts and the Supreme Court. It is notified by the CBIC to come into force on the 1st September 2019 and will be operational until the 31st December 2019.

Types of Dispute covered under the scheme:

  1. A show causes notice or appeals arising out of a show-cause notice pending as on the 30th June 2019.
  2. An enquiry, investigation or audit where the amount is quantified on or before the 30th June 2019.
  3. An amount in arrears.
  4. A voluntary disclosure.

Certain cases excluded under this scheme:

  1. Declaration related to excisable goods set forth in the Fourth Schedule(chapter 24 and 27) to the Central Excise Act,1944(tobacco and specified petroleum products).
  2. Cases related to the taxpayer has been convicted under the Central Excise Act,1994 or the Finance Act,1944.
  3. Cases involving erroneous refunds.
  4. Cases pending before the Settlement Commission.

Voluntary disclosure under this scheme:

1. Not eligible for any tax relief, but the relief available for interest and penalty.
2. No verification by a designated committee.
3. Within one year, if found to be false, appropriate proceedings shall be initiated.
The taxpayer can’t make a voluntary disclosure after an enquiry or investigation or auditor for an amount declared as payable in a return filed consequent to such proceedings.

Benefits of this scheme:

  1. A taxpayer can pay the outstanding tax amounts due and be free from any other consequences under the law.
  2. Taxpayers will get substantial relief in the form of full waivers of interest, penalties and fines.
  3. There will be a complete amnesty from prosecution proceedings.
  4. In cases of voluntary disclosure, the declarant will have to pay the full amount of disclosed duty.

Relief provided:

  • This scheme provides for a substantial relief margin on all Duty demands, ranging from 40% to 70% of the demand, except in the case of voluntary disclosure. The relief will be applicable as follows:
Relief Available from the Duty Demand SCN
Duty Demands for Rs.50 lakh or lesser 70%
Duty Demands for more than Rs.50 lakh 50%
For cases under investigation or audit, the same relief will also be available, however, the amount should have been quantified and communicated to the concerned party, or admitted by him in a statement, on or before the 30th June 2019.
Preconditions Restrictions of the scheme
  • The relief calculated shall be subject to the condition that any amount paid as pre-deposit will be deducted when issuing the statement indicating the amount payable by the declarant.
  • Provided that if the amount of pre-deposit or deposit already paid the amount payable the declarant will not be entitled to any refund.
  • Will not be paid through the input tax credit account.
  • Will not be taken as an input tax credit or entitle any person to take the input tax credit, as a recipient, of the excisable goods or taxable services.
  • Will not be refundable under any circumstances.

Process to verify the declaration: 

  • It will be a clear understanding by a flow chart.

After issuance of discharge certificate:

  1. Not be liable to pay any further duty, interest, or penalty with respect to the matter and the time period covered.
  2. Not be liable to be prosecuted under the Indirect Tax enactment.
  3. Shall not be reopened in any other proceeding under the Indirect Tax enactment.
  4. If false declaration is made involuntary disclosure, proceedings under the applicable laws will be started within a time-limit of one year.

Time for practice:

Ques.1 Window period of the Sabka Vishwas(Legacy Dispute Resolution) Scheme,2019 is_______.
a) 1st August,2019 to 1st August,2020
b) 1st September,2019 to 1st September,2020
c) 1st August,2019 to 31st December,2019
d) 1st September,2019 to 31st December,2019
e) None of these

Ans. Option(d)

Explanation:
The CBIC to come into force on the 1st September 2019 and will be operational until the 31st December 2019.

Ques.2 Relief on duty demands on more than Rs.50 lakh is_______.
a) 30%
b) 40%
c) 50%
d) 60%
e) 70%

Ans. Option(c)

Explanation:
Relief on duty demands up to Rs.50lakh is 70% and more than on Rs.50 lakh is 50%.
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