The Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

Published by

Aug 22, 2019

 

According to Cyril Amarchand Publications

The Sabka Vishwas (Legacy Dispute Resolution)
Scheme 2019 (“Scheme”) promulgated vide Finance
(No. 2) Act, 2019 (“Act”), is a dispute resolution cum
amnesty scheme introduced to reduce the massive
backlog of pending indirect tax litigations. The date
notifying its operationalization and the detailed
Rules governing the modalities of the Scheme are
still awaited. However, the Central Board of Indirect
Taxes and Customs (“CBIC”) has in the interim period released Frequently Asked Questions (“FAQs”)
on August 09, 2019 to the following operational
questions:
1. ELIGIBILITY UNDER THE SCHEME
1.1. Settlement Commission
Declarations cannot be made where an application
in connection therewith has already been filed
before the Settlement Commission.
1.2. Voluntary disclosure
A taxpayer is restricted from making a voluntary
disclosure after being subjected to an enquiry
or investigation or audit under an indirect tax
legislation.
However, FAQs state that a declarant seeking to
make a voluntary disclosure with respect to unpaid
tax dues which had been indicated as payable in
returns would be able to file declaration under
the Scheme. It is pertinent to note that the Act
specifically excludes such taxpayers from making
declarations under the Scheme. Thus, there appears
to be an anomaly.
Where a false declaration of material particulars is
detected within a period of 1 year from the date of
issue of discharge certificate, it would be presumed
that the declaration was never made and the
declarant would be subject to proceedings under
the applicable indirect tax legislation.
2. SCN COVERING MULTIPLE ISSUES / SCN TO
MULTIPLE NOTICEES
A declarant would not be allowed to file declarations
selectively on certain issues out of multiple issues
covered in a Show Cause Notice (“SCN”) but would
have to cover a SCN in entirety.
The issue of a discharge certificate with respect to
a matter for a time period would not preclude the
issue of a SCN on the same matter for a subsequent
TAX ALERT
August 20, 2019
Clarifications on
Sabka Vishwas
(Legacy Dispute Resolution)
Scheme, 2019
2
TAX ALERT 2019
period or a different matter for the same period.
In relation to SCNs issued to multiple persons,
where all noticees are jointly and severally liable to
pay the underlying tax dues, the FAQs clarify that
tax dues of a declarant noticee would be the entire
amount of tax dues under such SCN.
In a case where a SCN was issued demanding
duty from a main noticee and proposing penal
action against the noticee and co-noticees, such
co-noticees would have to make independent
declarations for waiver of penalty under the
Scheme. Such declarations can be made only after
the main noticee has settled the tax dues under
such SCN.
3. FILING & PROCESSING OF E-DECLARATIONS
3.1. E-filing
Declarations would have to be made electronically
on the portal (https://cbic-gst.gov.in). On receipt
of a declaration, the system will generate an auto
acknowledgement bearing a unique reference
number which would be used for all future
references to the declaration.
3.2 Processing of declaration and payments
The designated committee will verify all the
claims (except voluntary disclosures) and issue
a statement estimating the amount of tax dues
payable by the declarant in case such estimate
exceeds the amount declared. Pursuant to the
same, in case of a disagreement and on request
by the concerned declarant, an opportunity to be
heard would be provided to such declarant. On
finalization of the tax dues payable by a declarant
and issuance of statement for the same by the
designated committee, the declarant would be
required to discharge such tax dues as indicated in
the statement electronically within 30 days.
3.3 Arithmetic/ clerical errors
The FAQs clarify that where the statement indicating
the amount payable by the declarant suffers from
an arithmetical / clerical error which is apparent on
the face of record, the designated committee may
on its own or on such error being pointed out by
declarant modify its order within 30 days of issue of
statement.
3.4 Withdrawal of reply/ appeal/ writ/ reference
Any appeal, reference or reply to SCN filed by
a declarant in relation to tax dues for which a
declaration is filed would be deemed to have
withdrawn. In case of writ petition or appeal or
reference before the Hon’ble Supreme Court or
Hon’ble High Courts, the declarant shall have to file
an application for their withdrawal and shall furnish
the proof of such withdrawal to the designated
committee. Basis the proof of payment and proof
of withdrawal, within 30 days, the designated
committee will issue a discharge certificate in an
electronic form.
4. MISCELLANEOUS
4.1. Pre-deposit/ deposit
Any amount paid by a declarant as deposit during
enquiry or pre-deposit in appeal in connection with
the subject tax dues would be deducted from the
amount payable by the declarant. However, where
such pre-deposit or deposit exceeds the amount
payable by the declarant as per the statement
issued by the designated committee, no refund of
such excess would be available to the declarant.
4.2. Input Tax Credit
The declarant can neither pay any amount under
the Scheme through input tax credit nor can any
amount paid under the Scheme be available as
input tax credit to the declarant.
2 3
TAX ALERT 2019
OUR VIEW
While the FAQs seek to clarify and reaffirm various
aspects of the Scheme, there continue to be
ambiguities on the following issues:
1. Eligibility of disputes remanded back to the
lower authorities for calculation or deciding
basis the order of CESTAT or High court
including cases which have been referred back
to the adjudicating authority by the Settlement
Commission;
2. Treatment of duties paid under protest;
3. Whether a calculation error made by a declarant
can be rectified before the issue of liability
statement by the designated committee; and
4. Time-limit for filing of declarations by conoticees.
The Central Government is yet to release Rules with
respect to the Scheme. It is expected that the abovementioned impending concerns of the taxpayers
would be addressed by these Rules.

Disclaimer: This is not a legal binding document nor any legal advise


Articles authored by Martin Signer

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