Opportunity to unload old Indirect tax litigation Baggage “Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019”

Contributed by CS Payal Kataria

Budget 2019 was presented by first whole time Woman Finance Minister Ms. Nirmala Sitharaman on 5th July 2019. “Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019” proposed in Budget 2019 clearly shows the intention of the government to resolve the long-pending disputes under Pre GST indirect tax Regime and to start the journey of GST under excellent Governance. Rightly said by honorable Finance Minister “There is a need to unload this baggage and allow the business to move on.” She also told that Rs 3.75 lakh crore was blocked in litigations in service tax and excise.

It’s a great opportunity and big relief for the business community to resolve the burden of past disputes and to focus on business activities peacefully. Of course! these past disputes & mistakes must have given learnings, it’s time to learn from past mistakes, start prosperous business journey under GST Regime. Always Remember! GST is a technology driven taxation system and to catch wrongdoers whether intentional or unintentional, has become easy. Litigation involves mental stress, cost, time, energy and spoils name and fame. Make ethics of business to properly record all transactions as prescribed by law; no supply without an invoice, correct availment of Input tax credit and refunds and timely deposit taxes with the government.

Let’s understand the important provisions of this Scheme.

Scheme will come into force on such date as the Central  Government notify it in official Gazette. Notification is still awaited.

Indirect tax Laws covered under the scheme

the Central Excise Act, 1944

the Central Excise Tariff Act, 1985

Chapter V of the Finance Act, 1994 (Service Tax) and the rules made thereunder;

(b) the following Acts, namely:—

(i) the Agricultural Produce Cess Act,1940;

(ii) the Coffee Act, 1942;

(iii) the Mica Mines Labour Welfare Fund Act, 1946;

(iv) the Rubber Act, 1947;

(v) the Salt Cess Act, 1953;

(vi) the Medicinal and Toilet Preparations (Excise Duties) Act, 1955;

(vii) the Additional Duties of Excise (Goods of Special Importance) Act, 1957;

(viii) the Mineral Products (Additional Duties of Excise and Customs) Act, 1958;

(ix) the Sugar (Special Excise Duty) Act, 1959;

(x) the Textiles Committee Act, 1963;

(xi) the Produce Cess Act, 1966;

(xii) the Limestone and Dolomite Mines Labour Welfare Fund Act, 1972;

(xiii) the Coal Mines (Conservation and Development) Act, 1974;

(xiv) the Oil Industry (Development) Act, 1974;

(xv) the Tobacco Cess Act, 1975;

(xvi) the Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Cess Act, 1976;

(xvii) the Bidi Workers Welfare Cess Act, 1976;

(xviii) the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978;

(xix) the Sugar Cess Act, 1982;

(xx) the Jute Manufacturers Cess Act, 1983;

(xxi) the Agricultural and Processed Food Products Export Cess Act, 1985;

(xxii) the Spices Cess Act, 1986;

(xxiii) the Finance Act, 2004;

(xxiv) the Finance Act, 2007;

(xxv) the Finance Act, 2015;

(xxvi) the Finance Act, 2016;

(c) any other Act, as the Central Government may, by notification in the Official Gazette, specify.

Pre-deposits or deposits already paid

The relief calculated as per the scheme 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.

 Restrictions of Scheme

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.

In case any pre-deposit or other deposit already paid exceeds the amount payable as indicated in the statement of the designated committee, the difference shall not be refunded.

Conclusion:

Few points in the scheme need clarification, further comments can be made only once related Rules will be issued. Spreading awareness about the Scheme is essential so that the objective can be achieved. The Scheme is a WIN-WIN situation for both Government and taxpayers.

Source Finance Act 2019

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Readers are advised to consult the professional for understanding the applicability of this writeup in the respective scenarios. While due care has been taken in preparing this writeup, the existence of mistakes and omissions herein is not ruled out. No part of this writeup should be distributed or copied (except for personal, non-commercial use) without our written permission.

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