Dispute Resolution (Sabka Vishwas) Scheme 2019 - Applicability. Eligibility and Relief

The first lady finance minister of India, Nirmala Sitharaman recently presented the Indian Union Budget on 5th July 2019 along with which she announced a new amnesty scheme i.e. Dispute Resolution (Sabka Vishwas) Scheme 2019. The present blog presents some highlights of this including its Applicability, Eligibility, and Relief.

What is Dispute Resolution (Sabka Vishwas) Scheme?

Dispute Resolution Scheme was introduced along with budget this year. It is introduced to reduce pending litigation and covers various disputes under Service Tax, Central Excise, and some specified Cesses including Swachh Bharat Cess, Education Cess, and Krishi Kalyan Cess, etc.

The finance minister mentioned in her speech that, “An area that concerns me is that we have huge pending litigations from the pre-GST regime. More than Rs 3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow the business to move on.”

This scheme is somehow more powerful and different from other schemes. Sabka Vishwas Scheme waives up to 70% tax and 100% interest and penalty while earlier schemes like the Voluntary Compliance Encouragement Scheme (VCES) waived only on interests and penalty.

Applicability of Dispute Resolution Scheme:

Dispute Resolution (Sabka Vishwas) Scheme is only applicable for disputes pending under below given acts:

  • The Central Excise Tariff Act, 1985;
  • The Central Excise Act, 1944 and the rules made thereunder,
  • Chapter V – the Finance Act, 1994 (i.e., Service Tax) and the rules made thereunder;

The lists of other acts covered under the dispute resolution scheme are:

  • The Salt Cess Act
  • The Coffee Act
  • The Rubber Act
  • The Agricultural Produce Cess Act
  • The Textile Committee Act
  • The Mica Mines Labour Welfare Fund Act
  • The Additional Duties of Excise (Goods of Special Importance) Act
  • The Sugar (Special Excise Duty) Act
  • The Mineral Products (Additional Duties of Excise & Customs) Act
  • The Produce Cess Act
  • The Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labour Welfare Cess Act
  • The Finance Act 2004
  • The Finance Act 2007
  • The Finance Act 2015
  • The Finance Act 2016
  • The Spices Cess Act
  • The Agricultural and Processed Food Products Export Cess Act
  • The Additional Duties of Excise (Textiles & Textiles Articles) Act
  • The Bidi Workers Welfare Cess Act
  • The Jute Manufacturers Cess Act
  • The Tobacco Cess Act
  • The Coal Mines (Conservation & Development) Act
  • The Oil Industry (Development) Act
  • The Limestone & Dolomite Mines Labour Welfare Fund Act
  • The Medicinal & Toilet Preparations (Excise Duties) Act

Eligibility Criterion for Dispute Resolution (Sabka Vishwas) Scheme 2019

All the individuals are eligible to file the declaration under the Sabka Vishwas Scheme. However, there are some exceptions. Following is the list of exceptions, i.e., the following individuals cannot opt for this Scheme:

  1. An individual who has already received a show-cause notice and the final hearing of the same has taken place on or before the date of 30th June 2019.
  2. An individual who had received a show-cause notice for a refund or erroneous refund.
  3. An individual who has filed an appeal and the final hearing of the same has already taken place on or before the date of 30th June 2019.
  4. An individual who had already applied for the settlement of the matter to the settlement commission.
  5. An individual who had been convicted for any offence or has intended to file a declaration under the Scheme.
  6. An individual making voluntary disclosure after being subjected to any inquiry or investigation or audit.
  7. An individual who is making voluntary disclosure after filing the return, wherein, he had shown the payable duty amount, but, has not paid it.
  8. An individual seeking to make a declaration irrespective to the excisable goods stated in the Fourth Schedule to the Central Excise Act 1944.
  9. An individual subjected to an inquiry or an investigation or audit and the amount of payable duty involved is not yet calculated on or before the date of 30th June 2019

Relief available under Dispute Resolution (Sabka Vishwas) Scheme 2019:

The relief given to people under the cases where dues related to a show-cause notice or an appeal that is pending as on date 30th June 2019 and cases where the tax dues are linked to an inquiry or an investigation or audit against the declarant and the amount is quantified on or before the date 30th June 2019 includes:

Amount of dispute duty

Payable amount as per the scheme

INR 50 Lakhs or less

70% of the tax dues                                              

More than INR 50 Lakhs

50% of the tax dues

 

The Relief given to people under the cases where the tax dues related to an amount in arrears or the cases where the duty amount declared as payable in the return, but, the same, is not yet paid includes:

Amount of dispute duty

Payable amount as per the scheme

INR 50 Lakhs or less

60% of the tax dues

More than INR 50 Lakhs

40% of the tax dues

 

The relief is given to people under the cases where the tax dues related to the show cause notice for late fees/penalty includes:

  • If the amount of duty in the notice is paid or is NIL, the available relief will include the entire amount of late fees/penalty.

Conclusion

Declared along with union budget this scheme appears to be strong and helpful than other schemes. It is quite well framed but still requires clarifications for some open issues like manner of application start and end date and many more. It aims at solving disputes under Service Tax, Central Excise, and some specified Cesses including Swachh Bharat Cess, Education Cess and Krishi Kalyan Cess, etc. The scheme waives at 100% interest and penalties and 70% of the tax dues offering waiver of the tax itself along with interest, penalty and prosecution. Leave your comments below and let us know would you go for it?

The author is an expert of Income tax-related matters, Click here to know more about him.

advakash

Akash Kumar

I’m professionally involved in Legal Compliance related activity for my Company. I’m focused on providing Legal & Tax-related Information.

Comments