Government of India Ministry of Finance Department of Revenue Central
Board of Indirect Taxes and Customs
Circular No. 1071/4/2019-CX.8
Dated, the 27th August, 2019
To
The Principal Chief Commissioners/ Chief Commissioners (All) The
Principal Director Generals/ Director Generals (All)
Dear Madam/Sir,
I am directed to state that the Government has announced the Sabka Vishwas
(Legacy Dispute Resolution) Scheme, 2019 as a part of the recent Union Budget.
Further, in accordance with the Finance (No. 2) Act, 2019, the Central
Government has notified the Sabka Vishwas (Legacy Dispute Resolution) Scheme
Rules, 2019 as well as issued Notification No. 04/2019 Central Excise-NT dated
21.08.2019 to operationalize this Scheme from 01.09.2019 to 31.12.2019.
2. As may be appreciated, this Scheme is a bold endeavor to unload the baggage
relating to the legacy taxes viz. Central Excise and Service Tax that have been
subsumed under GST and allow business to make a new beginning, and focus on GST.
Therefore, it is incumbent upon all officers and staff of CBIC to partner with
the trade and industry to make this Scheme a grand success.
3. Dispute
resolution and amnesty are the two components of this Scheme. The dispute
resolution component is aimed at liquidating the legacy cases locked up in
litigation at various forums whereas the amnesty component gives an opportunity
to those who have failed to correctly discharge their tax liability to pay the
tax dues. As may be seen, this Scheme offers substantial relief to the taxpayers
and others who may potentially avail it. Moreover, the Scheme also focuses on
the small taxpayers as would be evident from the fact that the extent of relief
provided is higher in respect of cases involving lesser duty (smaller taxpayers
can generally be expected to face disputes involving relatively lower duty
amounts).
4. The relief extended under this Scheme is summed up, as
follows:
(a) For all the cases pending in adjudication or appeal (at any
forum), the relief is to the extent of 70% of the duty involved if it is Rs. 50
lakhs or less and 50% if it is more than Rs. 50 lakhs. The same relief is
available for cases under investigation and audit where the duty involved is
quantified and communicated to the party or admitted by him in a statement on or
before 30.06.2019.
(b) In cases of confirmed duty demand, where there is
no appeal pending, the relief offered is 60% of the confirmed duty amount if the
same is Rs. 50 lakhs or less and it is 40% if the confirmed duty amount is more
than Rs. 50 lakhs.
(c) In cases of voluntary disclosure of duty not paid,
the full amount of disclosed duty would have to be paid.
(d) There will
be full waiver of interest and penalty under all the categories of cases, as at
(a) to (c) above.
5. The relief under this Scheme is illustrated, as
follows:
(i) If the amount of duty (including CENVAT credit) being
litigated is Rs.50 lakhs, then the taxpayer only needs to pay only Rs. 15 lakhs
to settle his case.
(ii) If the amount of duty(including CENVAT credit)
being litigated is Rs. 1 crore, then the taxpayer only needs to pay only Rs. 50
lakhs to settle his case.
(iii) If the amount of duty being litigated is
either because the show cause notice was only for penalty or because the duty
was deposited at any subsequent stage, and only penalty is being contested, then
the taxpayer does not need to deposit anything to settle his case. However, the
taxpayer would have to make a declaration under this Scheme.
(iv) If the
duty (including CENVAT credit) involved during investigation or audit is Rs. 50
lakhs, then the taxpayer only needs to pay Rs.15 lakhs to settle his case.
(v) If the amount in arrears is Rs.50 lakhs, then the taxpayer only needs to
pay only Rs. 20 lakhs to settle his case.
(vi) If the taxpayer makes a
voluntary disclosure of Rs. 1 crore, then he will need to pay Rs. 1 crore to
settle his case.
6. It may be appreciated that the ambit of this Scheme
is wide enough to cover all kinds of pending disputes, including call book
cases, except for a few categories. The exclusions are firstly, cases in respect
of goods that are still subject to levy of Central Excise such as specified
petroleum products and tobacco i.e. goods falling in the Fourth Schedule to the
Central Excise Act, 1944. Secondly, cases for which the taxpayer/noticee has
already been convicted in a Court of law. Thirdly, cases under adjudication or
litigation where the final hearing has taken place on or before 30.06.2019.
Fourthly, cases of erroneous refunds. Lastly. cases which are pending before the
Settlement Commission.
7. Some of the highlights of this Scheme are that
it will be fully automated with a dedicated portal (cbic-gst.gov.in) for online
filing of declaration and communication of final decision. DG (Systems) will
shortly issue a user manual for the online facility being provided to implement
this Scheme. This has been done with the objectives of ensuring transparency,
speed and accountability in the decision making. There are also fixed timelines
for the various processes involved which are to be strictly adhered to so that
the entire process of filing of declaration to communication of Department’s
decision and to payment gets completed within 90 days. This is important as
there is no scope for extension of the time period for the sub-processes or the
complete process. It is also important to appreciate that while this Scheme
indicates various timelines, it is in the common interest of both the taxpayer
and the Department that any declaration made thereunder is expeditiously handled
well before the indicated timelines. This should be an area of focus for the
Designated Committees as well as the supervisory Principal Chief
Commissioner/Chief Commissioner concerned.
8. Once the declarant produces
the proof of payment and withdrawal of appeal in High Court and Supreme Court,
if applicable, for in cases of lower forums the Scheme provides for deemed
withdrawal of appeal, a discharge certificate will be issued indicating a full
and final closure of the proceedings in question for both the Department and the
taxpayer. It merits mention that every discharge certificate shall be conclusive
as to the matter and time period stated therein. The declarant shall be not be
liable to pay any further duty, interest or penalty. No matter and time period
covered under a discharge certificate shall be reopened in any other proceedings
under the said indirect tax enactments. This entails a full waiver from
prosecution as well. The only exception is in case of a taxpayer’s voluntary
disclosure of liability as there is no way to verify its correctness, so a
provision is made to reopen such declaration within one year of issue of a
discharge certificate, if subsequently any material particular is found to be
false.
9. Moreover, the scope of discretion has been kept to the minimum
by linking the relief under this Scheme to the duty amount which is already
known to both the Department and the taxpayer in the form of a show cause
notice/order of determination or a written communication. The calculation of
relief itself will be automated. Even in case of voluntary disclosure, no
verification will be carried out by the Department. Still in the eventuality the
declarant seeks the opportunity of being heard, the decision would be taken only
after giving him this opportunity.
10. Further, the following issues are
clarified in the context of the various provisions of the Finance (No.2) Act,
2019 and Rules made thereunder:
(a) Section 129(2)(a) provides that no
person being a party in appeal, application, revision or reference shall contend
that by issuing a discharge certificate, Department has accepted the disputed
position. Section 129(2)(b) further provides that issue of a discharge
certificate does not prevent issuance of a show cause notice for the same matter
for a subsequent period or for a different matter in the same period. It is
clarified that similar position will apply in case of Department also. In other
words, a declaration under this Scheme will not be a basis for assuming that the
declarant has admitted the position, and no fresh show cause notice will be
issued merely on that basis.
(b) Section 125(1)(d) mentions that the
Scheme is not available to an applicant who has been issued a show cause notice
relating to refund or erroneous refund. It has potential to lead to an
interpretation that such persons will not be able to opt for the Scheme for any
other dispute as well, since the restriction is on ‘the person’ in place of ‘the
case’. It is clarified that the exception from eligibility is for ‘the case’ and
not ‘the person’. In other words, if a person has been issued a show cause
notice for a refund/erroneous refund and, at the same time, he also has other
outstanding disputes which are covered under this Scheme, then, he will be
eligible to file a declaration(s) for the other case(s). Same position will
apply to persons covered under Sections 125(1)(a), (b), (c), (e) and (g).
(c) This Scheme provides for adjustment of any amount paid as pre-deposit
during appellate proceedings or as deposit during enquiry, investigation or
audit [Sections 124(2) and 130(2) refer]. In certain matters, tax may have been
paid by utilising the input credit, and the matter is under dispute. In such
cases, the tax already paid through input credit shall be adjusted by the
Designated Committee at the time of determination of the final amount payable
under the Scheme.
(d) With respect to penalty/late fee matters [Section
124(1)(b) refers], a doubt has been expressed that only show cause notices for
late fee or penalty are covered under this Scheme as there is no mention of
appellate proceedings. It is clarified that the provisions apply to any show
cause notice for penalty/late fee, irrespective of the fact that it is under
adjudication or appeal. Moreover, there can be a show cause notice that
originally also involved a duty demand, and the amount of duty in the said
notice became ‘nil’ whether on account of the fact that same has been paid under
this Scheme or otherwise. Such cases are also covered under Section 124(1)(b).
(e) In case of appeals, the applicant is ineligible to apply if the final
hearing is concluded but the order is awaited as on 30.06.2019. The hearings in
matters are typically rescheduled even after the final hearing due to new bench,
change in officer or any other reason. It is clarified that this restriction
will apply to only those cases, where the appellate forum has heard the matter
finally as on 30.06.2019.
(f) Section 125(g) excludes the cases where an
application has been filed before the Settlement Commission for settlement.
However, in many such cases, proceedings before the Commission may abate due to
reasons such as rejection of the application by the Commission or due to order
of the Commission not being passed within the prescribed time etc. It is
clarified that all such cases which are outside the purview of the Settlement
Commission shall be covered under the Scheme under the relevant category of
adjudication or appeal or arrears as the case may be provided the eligibility is
otherwise established under this Scheme. Further, any pending appeals, reference
or writ petition filed against or any arrears emerging out of the orders of
Settlement Commission are also eligible under the Scheme.
(g) Cases under
an enquiry, investigation or audit where the duty demand has been quantified on
or before the 30th day of June, 2019 are eligible under the Scheme. Section 2(r)
defines “quantified” as a written communication of the amount of duty payable
under the indirect tax enactment. It is clarified that such written
communication will include a letter intimating duty demand; or duty liability
admitted by the person during enquiry, investigation or audit; or audit report
etc.
(h) Rule 3(2) of the Sabka Vishwas (Legacy Dispute Resolution)
Scheme Rules, 2019 provides that a separate declaration shall be filed for each
case. Many a times a show cause notice covers multiple matters concerning duty
liability. It is clarified that a declarant cannot opt to avail benefit of
scheme in respect of selected matters. In other words. the declarant has to file
a declaration for all the matters concerning duty liability covered under the
show cause notice.
(I) Section 124(1) (b) provides that where the tax
dues are relatable to a show cause notice for late fee or penalty only, and the
amount of duty in the said notice has been paid or is ‘nil’, then, the entire
amount of late fee or penalty will be waived. This section, inter alia, covers
cases of penal action against co-noticees. In case of a show cause notice
demanding duty/tax from main taxpayer and proposing penal action against
co-noticees, it is clarified that the co-noticees can’t avail the benefits of
the scheme till such time the duty demand is not settled. Once, the main-noticee
discharges the duty demand, the co-noticees can apply under this Scheme. This
will also cover cases where the main noticee has settled the matter before the
Settlement Commission and paid the dues and in which co-noticees were not a
party to the proceedings before the Settlement Commission.
(j) Section
127(5) of the Scheme provides that the declarant shall pay the amount indicated
in the Statement issued by the Designated Committee within a period of thirty
days. If the declarant does not pay the amount within the stipulated time, due
to any reason, the declaration will be treated as lapsed.
(k) In respect
of matters under investigation by DGGI, there may be cases where the duty
quantified relates to more than one Commissionerate. In such cases, the
Designated Committee of the Commissionerate involving the maximum amount of duty
will decide the case. Further, in other cases of DGGI wherein the show cause
notice that has been issued covers more than one Commissionerate, a common
adjudicator must be quickly appointed under intimation to the Chief Commissioner
concerned and DG Systems so the Designated Committee of that Commissionerate can
finalize this matter.
11. In order to make this Scheme a success. the
following actions are required to be taken on priority:
(i) It shall be
ensured that the updated and complete records of the cases eligible under the
Scheme are made available to the Designated Committees by 31.08.2019. It may be
noted that except for voluntary disclosure, the information regarding eligible
taxpayers is readily available with the field formations through show cause
notices which are yet to be adjudicated, or cases which are pending at various
appellate forums or the cases under investigation or audit where the duty demand
has been quantified and communicated on or before 30.06.2019 or the cases of
recoverable arrears.
(ii) An intensive out-reach programme to create
awareness among the trade and industry at large and the eligible taxpayers in
particular needs to be carried out. In this direction it will also be desirable
to communicate to the eligible taxpayers the benefits of this Scheme through a
polite email or phone call or letter. For these purposes the publicity material
prepared by DGTPS can be used. Also. registration details of such eligible
taxpayers shall be conveyed to DG (Systems) so that periodic SMS can be sent to
them, informing about this Scheme.
(iii) Though this Scheme provides a
period of sixty days for the Designated Committee to decide on a declaration
filed by a taxpayer, a speedier disposal is expected by the Board. For instance,
in cases of voluntary disclosure, no verification is necessitated which means
that the declaration will be accepted as such. Hence, such cases must be
finalized within 15 days of filing of the declaration. Similarly, as the duty
amount is already known in the form of a show cause notice/order of
determination or a written communication/or order in appeal or disputed amount
in appeal, and the tax-relief will be calculated by the system automatically,
where these particulars are found to be correct as per the declaration filed and
the records available with the Department, such cases must also be finalized
within 15 days of filing of the declaration. These timelines must be strictly
adhered to.
(iv) There shall be two Designated Committees of two officers
each in a Commissionerate to process the declarations received thereunder (for
this purpose Audit Commissionerates are to be left out). The Designated
Committees have been set up based on the amount of tax dues. For removal of
doubts, it is, hereby, clarified that this duty demand is before applying the
tax-relief. For example, if in a show cause notice the duty demanded is Rs. 60
lakhs, the same will fall under the purview of a Committee consisting of
Principal Commissioner/Commissioner and Additional/Joint Commissioner even
though the final duty payable after applying tax-relief will be less than Rs. 50
lakhs. Essentially, where the duty payable as determined by the Designated
Committee comes out to be more or less than the amount declared by the taxpayer,
there will no change in the composition of the Designated Committee. In other
words, the same Designated Committee to which the declaration is automatically
routed based on the amount mentioned therein will take a final decision in the
matter. The members of the Committee will be nominated by jurisdictional
Principal Chief Commissioner/Chief Commissioner and Principal Director General/
Director General, DGGI, as the case may be. It is expected that the Designated
Committee will be prompt in decision making by consensus and the senior officer
in the Committee will take a lead to ensure the same.
(v) It shall be the
responsibility of the Zonal Principal Chief Commissioners/Chief Commissioners
and Principal Director General/ Director General, DGGI (in the case of DGGI,
Delhi) to ensure the success of the Scheme. Apart from the reach-out programme
outlined at (i) above, it also needs to be ensured that the members of the
Designated Committee are properly trained and well versed with the Scheme and
the software application. In this connection DG (NACIN) has been instructed to
carry out suitable training.
12. The Sabka Vishwas (Legacy Dispute
Resolution) Scheme, 2019 has the potential to liquidate the huge outstanding
litigation and free the taxpayers from the burden of litigation and
investigation under the legacy taxes. The administrative machinery of the
Government will also be able to fully focus on helping the taxpayers in the
smooth implementation of GST. Thus, the importance of making this Scheme a grand
success cannot be overstated. The Principal Chief Commissioners/Principal
Directors General/Chief Commissioners/Directors General and all officers and
staff are instructed to familiarize themselves with this Scheme and actively
ensure its smooth implementation.
F. No. 267/78/2019/CX-8-Pt.III
Yours sincerely
(Navraj Goyal)
OSD(CX)
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