- The introduction of GST Laws, led to subsuming of multiple statues of the pre GST regime viz Central Excise Act, Central and State Sales tax Acts, Service Tax (Finance Act 1994) etc. GST law was introduced with effect from 01/07/2017. The GST Laws envisages “Transition provisions” under its ambit. As far as the ongoing transaction of supply of goods and or services are concerned, there was a well-defined structure, for smooth transition from the Pre GST regime to GST regime. In respect of the adjudication and litigations which were ongoing under the Pre GST regime, the “transition provisions” mentioned it clearly that if at all there were any duty payments or refunds arising out of such adjudication or litigations, the same were to be to be disposed in the manner laid down as per the Pre GST laws and rules. However a need was felt by the Government, that the pending adjudication and litigations pertaining to the Pre GST regimes needs to attain finality, as soon as possible. This does not mean that the issues will have to be closed in a haphazard manner, but needs to be in quick and effective manner. Now the important question under consideration is, if there has been an effective law in place even during the Pre GST regime, then why is such need felt by the Government to close the earlier issues? There is no specific answer to this question. Sometimes in order to bring a change in larger scale, it is important to take a few steps which may be slightly different than the originally set framework. Likewise, in order to bring all the taxpayers under the GST regime, a need was felt as to provide an effective mechanism to clear the pending adjudications and litigations. However clearing the pending adjudication and litigations of course was not to happen by compromising the sanity of the law.
- Under the state VAT and Sales tax laws, amnesty schemes were introduced. So far as the issues under Service Tax and Central Excise Act are concerned, vide financial budget 2019, Sabka Vishwas “Legacy dispute resolution” scheme 2019 has been introduced. The scheme is an opportunity to settle the, “specified” category of pending adjudication and litigations under the Service tax (Finance Act 1994) and Central Excise Act.
- The provisions of the scheme have been laid down under the finance act (2) of 2019
IMPORTANT DEFINITIONS AS PER SECTION 121 OF THE FINANCE ACT
- 1. “amount in arrears” means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of
- (i) No appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of time for filing appeal; or
- (ii) An order in appeal relating to the declarant attaining finality; or
- (iii) The declarant having filed a return under the indirect tax enactment on or before the 30th day of June, 2019, wherein he has admitted a tax liability but not paid it.
- 2. “Appellate forum” means the Supreme Court or the High Court or the Customs, Excise and Service Tax Appellate Tribunal or the Commissioner (Appeals).
- 3. “Audit” means any scrutiny, verification and checks carried out under the indirect tax enactment, other than an enquiry or investigation, and will commence when a written intimation from the central excise officer regarding conducting of audit is received.
- 4. “Order” means an order of determination under any of the indirect tax enactment, passed in relation to a show cause notice issued under such indirect tax enactment.
- 5. “Order in appeal” means an order passed by an appellate forum with respect to an appeal filed before it.
MEANING OF “TAX DUES” AS PER SECTION 123
- For the purposes of the Scheme, “tax dues” means
- (a) Where:-
- (i) A single appeal arising out of an order is pending as on the 30th day of June, 2019 before the appellate forum, the total amount of duty which is being disputed in the said appeal.
- (ii) more than one appeal arising out of an order, one by the declarant and the other being a departmental appeal, which are pending as on the 30th day of June, 2019 before the appellate forum, the sum of the amount of duty which is being disputed by the declarant in his appeal and the amount of duty being disputed in the departmental appeal.
- Provided that nothing contained in the above clauses shall be applicable where such an appeal has been heard finally on or before the 30th day of June, 2019.
- Provided that if the said notice has been issued to the declarant and other persons making them jointly and severally liable for an amount, then, the amount indicated in the said notice as jointly and severally payable shall be taken to be the amount of duty payable by the declarant.
- (c) Where an enquiry or investigation or audit is pending against the declarant, the amount of duty payable under any of the indirect tax enactment which has been quantified on or before the 30th day of June, 2019.
- (d) Where the amount has been voluntarily disclosed by the declarant, then, the total amount of duty stated in the declaration.
- (e) Where an amount in arrears relating to the declarant is due, the amount in arrears.
RELIEF UNDER THE SCHEME
Sr No Particulars Condition of amount Percentage of relief 1 Where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019. If the amount of duty is less than or equals Rs 50 lakhs 70% of the tax dues If the amount of duty is more than Rs 50 lakhs 50% of the tax dues 2 where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty; Amount pending or payable is only late fees or penalty 100 % of such amount 3 where the tax dues are relatable to an amount in arrears The amount of duty is, rupees fifty lakhs or less 60% of such dues The amount of duty is more than rupees fifty lakhs 40% of such dues In a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it the duty amount indicated is rupees fifty lakhs or less 60% of such dues amount indicated is more than rupees fifty lakhs 40% of such dues 4 where the tax dues are payable on account of a voluntary disclosure by the declarant NIL ie No relief is available
- The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall 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 by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund.
PERSONS INELIGIBLE TO MAKE DECLARATION AND CLAIM RELIEF UNDER THE SCHEME
- (a) Who have filed an appeal before the appellate forum and such appeal has been heard finally on or before the 30th day of June, 2019.
- (b) Who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration.
- (c) Who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019.
- (d) Who have been issued a show cause notice under indirect tax enactment for an erroneous refund or refund.
- (e) Who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019.
- (f) a person making a voluntary disclosure,—
- (i) After being subjected to any enquiry or investigation or audit; or
- (ii) having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it.
- (g) Who have filed an application in the Settlement Commission for settlement of a case.
- (h) Persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944.
TIME LIMITS FOR ISSUANCE OF STATEMENT, TIME LIMIT FOR PAYMENT AND FURTHER ACTIONS Section 127
- Where the declarant has filed an appeal or reference or a reply to the show cause notice against any order or notice giving rise to the tax dues, before the appellate forum, other than the Supreme Court or the High Court, then, notwithstanding anything contained in any other provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn.
- Where the declarant has filed a writ petition or appeal or reference before any High Court or the Supreme Court against any order in respect of the tax dues, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition, appeal or reference and after withdrawal of such writ petition, appeal or reference with the leave of the Court, he shall furnish proof of such withdrawal to the designated committee, in such manner as may be prescribed, along with the proof of payment referred to in sub-section (5).
- On payment of the amount indicated in the statement of the designated committee and production of proof of withdrawal of appeal, wherever applicable, the designated committee shall issue a discharge certificate in electronic form, within thirty days of the said payment and production of proof.
RECTIFICATION OF ERRORS IN RESPECT OF STATEMENT ISSUED Section 128
- Within thirty days of the date of issue of a statement indicating the amount payable by the declarant, the designated committee may modify its order only to correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo motu, by the designated committee.
ISSUANCE OF DISCHARGE CERTIFICATE 129
(1) Every discharge certificate issued under section 126 with respect to the amount payable under this Scheme shall be conclusive as to the matter and time period stated therein, and—
- (a) The declarant shall not be liable to pay any further duty, interest, or penalty with respect to the matter and time period covered in the declaration;
- (b) The declarant shall not be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration.
- (c) no matter and time period covered by such declaration shall be reopened in any other proceeding under the indirect tax enactment.
- (2) Notwithstanding anything contained in sub-section (1),—
- (a) no person being a party in appeal, application, revision or reference shall contend that the central excise officer has acquiesced in the decision on the disputed issue by issuing the discharge certificate under this scheme;
- (b) the issue of the discharge certificate with respect to a matter for a time period shall not preclude the issue of a show cause notice,— (i) for the same matter for a subsequent time period; or (ii) for a different matter for the same time period;
- (c) in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted.
RESTRICTIONS IN RESPECT OF AMOUNTS PAID UNDER THE SCHEME
(1) Any amount paid under this Scheme,—
- (a) shall not be paid through the input tax credit account under the indirect tax enactment or any other Act;
- (b) shall not be refundable under any circumstances;
- (c) shall not, under the indirect tax enactment or under any other Act,—
- (i) be taken as input tax credit; or
- (ii) entitle any person to take input tax credit, as a recipient, of the excisable goods or taxable services, with respect to the matter and time period covered in the declaration.
- (2) In case any predeposit or other deposit already paid exceeds the amount payable as indicated in the statement of the designated committee, the difference shall not be refunded.
- The application under the scheme and the proceedings thereof are in accordance of the SBVLDRS Rules 2019. The prescribed form and the rules will have to be referred in case of an applicant aspiring to make an application.
- Disclaimer:The views provided above are on the basis of our understanding of the GST Laws, Rules and Regulations. The adjudicating or Judicial Authorities may or may not agree with the views expressed above