Central Government announces scheme where taxpayers can settle pending Service Tax and Central Excise disputes without any prosecution
Finance Ministry on August 21, 2019 has notified the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (“Scheme”) which will become operational between September 1, 2019 and December 31, 2019. The Scheme targets to solve the pending disputes relating to Service Tax and Central Excise cases (“Legacy Cases”). The provisions of Service Tax and Central Excise are applicable currently as they have been subsumed by the Goods and Service Tax.
The Scheme is proposed to operate at two levels: (i) liquidating the Legacy Cases that are pending; and (ii) by protecting the interest of taxpayers. Under this scheme, the taxpayers are required to pay the outstanding tax and then be free of any other consequence. The Scheme allows substantial discounts in the tax dues for all categories in addition to the full waiver of interest, fine, penalty and prosecution. The proposed relief in Legacy Cases are as follows:
- Cases which are currently undergoing appeal or adjudication: 70% relief from the duty demand, if the demand is equal to or less than INR 50,00,000. In cases where the demand is more than INR 50,00,000 then 50% relief will be granted. This relief will also be granted for cases that are either (a) under investigation; or (b) the duty to be paid by the tax payer has been quantified and communicated to the tax payer on or before June 30, 2019.
- Cases where the tax liability has been determined: 60% relief from duty demand, where confirmed duty demand is equal to or less than INR 50,00,000 and if the confirmed duty demand is more than INR 50,00,000 the 40% relief will be granted; subject to the condition that there is no pending appeal.
- In cases related to voluntary disclosure, the person availing the Scheme will be required to pay full amount of the disclosed duty.
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This is a welcome move from the Government. The Scheme provides for speedy disposal of pending Legacy Cases as well as provides ample discounts and immunity from prosecution. Keeping in mind that there would be a substantial amount of pending cases involving small taxpayers, the relief provided by the Government through this Scheme is laudable. However, that being said, the success of Scheme is completely in the hands of the taxpayers and it is hoped that taxpayers will avail the benefits of this Scheme.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.