Update 2nd September 2019: The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019,(SVLDRS) application has been made available online from 1-9-19. The declaration under Section 125 of the Finance (No. 2) Act, 2019 can now be made electronically in Form SVLDRS-1 by the declarant.
The Union Finance Ministry, Nirmala Sitaraman introduced ‘Sabka Vishwas-Legacy Dispute Resolution Scheme’ in Union Budget 2019. A 4-month program, Sabka Vishwas aims to reduce the cases under legacy service tax and central excise by resolving disputes and granting amnesty to the taxpayers.
Sabka Vishwas – Legacy Dispute Resolution Scheme, 2019 shall come into force from 1st of September, 2019 and stay operational until December 31, 2019.
The Need for Legacy Dispute Resolution Scheme
With a humongous 3.75 Lakh-Crores blocked in Service tax and excise, resolving and freeing the small taxpayers of their pending disputes with the tax administration was quintessential. Nevertheless, Sabka Vishwas Scheme has been tailored, keeping the following objectives in mind.
- Liquidation of past disputes: Aimed at Resolving the legacy cases of central excise and service tax that are subsumed in GST and are pending in litigation at various forums.
- Voluntary disclosure: an opportunity for the taxpayers to pay the outstanding tax and be free of any other consequence under the law.
Any person falling under the following categories is eligible, subject to other conditions under the Scheme, to file a declaration:
- Who has a show-cause notice for duty or one or more appeals arising out of such notice pending and where the final hearing has not taken place as on 30.06.2019.
- Who has been issued a show-cause notice for penalty and late fee-only and where the final hearing has not taken place as on 30.06.2019.
- Who has recoverable arrears pending.
- Who has cases under investigation and audit where the duty involved has been quantified and communicated to the party or admitted by him in a statement on or before 30th June, 2019.
- Who wants to make a voluntary disclosure.
Furthermore, the scheme is applicabale on the below given Acts
- The Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or Chapter V of the Finance Act, 1994 and the rules made thereunder;
- The following Acts, namely:-
- The Agricultural Produce Cess Act,1940;
- The Coffee Act, 1942;
- The Mica Mines Labour Welfare Fund Act, 1946;
- The Rubber Act, 1947;
- The Salt Cess Act, 1953;
- The Medicinal and Toilet Preparations (Excise Duties) Act, 1955;
- The Additional Duties of Excise (Goods of Special Importance) Act, 1957;
- The Mineral Products (Additional Duties of Excise and Customs) Act, 1958;
- The Sugar (Special Excise Duty) Act, 1959;
- The Textiles Committee Act, 1963;
- The Produce Cess Act, 1966;
- The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972;
- The Coal Mines (Conservation and Development) Act, 1974;
- The Oil Industry (Development) Act, 1974;
- The Tobacco Cess Act, 1975;
- The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Cess Act, 1976;
- The Bidi Workers Welfare Cess Act, 1976;
- The Additional Duties of Excise (Textiles and Textile Articles) Act, 1978;
- The Sugar Cess Act, 1982;
- The Jute Manufacturers Cess Act, 1983;
- The Agricultural and Processed Food Products Export Cess Act, 1985;
- The Spices Cess Act, 1986;
- The Finance Act, 2004;
- The Finance Act, 2007;
- The Finance Act, 2015;
- The Finance Act, 2016;
- Any other Act, as the Central Government may, by notification in the Official Gazette, specify.
Source: Sabka Vishwas FAQ (as collated on the publishing date)
Exclusions from the Scheme
Although the scheme aims to resolve the disputes under service tax and central excise, the following cases are exclude from the scheme:
- Cases in respect of excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 (this includes tobacco and specified petroleum products)
- Cases for which the taxpayer has been convicted under the Central Excise Act, 1944 or the Finance Act, 1944
- Cases involving erroneous refunds
- Cases pending before the Settlement Commission.
Benefits under the Scheme
- Total waiver of interest, penalty and fine
- Immunity from prosecution
- Cases pending in adjudication or appeal, a relief of 70% from the duty demand if it is ? 50 Lakh or less and 50% if it is more than ? 50 Lakh
- The same relief for cases under investigation and audit where the duty involved is quantified on or before 30th June, 2019
- In case of an amount in arrears, the relief offered is 60% of the confirmed duty amount if the same is ? 50 Lakh or less and it is 40% in other cases.
- In cases of voluntary disclosure, the declarant will have to pay the full amount of disclosed duty.
Other Notable features of the Scheme
- Facility for adjustment of any deposits of duty already made
- Settlement dues to be paid in cash electronically only and cannot be availed as input tax credit later
- A full and final closure of the proceedings in question. The only exception is that in case of voluntary disclosure of liability, there is provision to reopen a false declaration within a period of one year.
- Proceedings under the Scheme shall not be treated as a precedent for past and future liabilities
- Final decision to be communicated within 60 days of application.
- No final decision without an opportunity for a personal hearing in case of any disagreement
- The Proceedings under the Scheme will be fully automated
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