The Finance Act, 2019 presented by the Hon’ble Finance Minister Nirmala Sitharaman will be remembered for the bahi khata instead of the traditional suitcase. In addition to a slew of amendments and introduction of the new provisions in the direct and indirect tax regime, the first Budget of the Modi Government 2.0 also introduced Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Following are some of the salient features of the Scheme:
- The Scheme is applicable to the erstwhile indirect tax laws like the Central Excise Act, the Service Tax Law, etc.
- The Scheme provides for a relief in respect of the duty which has been determined as payable in a Show Cause Notice issued on or before June 30, 2019 or, which is the subject matter of any appeal which is pending to be disposed of as on June 30, 2019, or which has been shown as payable in any return filed on or before June 30, 2019 but has not been paid. The quantum of relief ranges from 40-70% of the amount of duty.
- The Scheme also provides for relief in the amount of penalty or late fees up to 100%.
- The Scheme provides no relief in respect of the tax dues payable on account of voluntary disclosure by the taxable person.
- The amount payable under the Scheme shall not be paid through Input Tax Credit and shall not be refundable.
- The amount paid under the Scheme cannot be taken as Input Tax Credit by any person.
- Where a taxable person intends to make a declaration under the Scheme, any appeal before the appellate authorities except for the High Court and the Supreme Court shall be deemed to have been withdrawn. In case the appeal is pending before the High Court and the Supreme Court, the taxable person shall be required to make an application for withdrawal of such appeal.
- A taxable person intending to take benefit of the Scheme shall be required to make an application in the prescribed format.
- A designated committee shall be set up to consider the applications made under the Scheme and to pass the requisite orders.
The Scheme is a welcome move by the Government to resolve thousands of pending cases and to settle the disputed amount of duty and/or penalty. Businesses are advised to take the utmost benefit of the Scheme and to settle the disputed amount of duty and/or penalty. This will help them reduce the litigation costs and buy peace of mind too.