CBIC Issues clarification on Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Central Board of Indirect Taxes and Customs (CBIC) in circular dated 25th September, 2019 has clarified certain issues under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Key Highlights from the clarification:

  1. Section 125 of the Finance Act specifies people who are eligible to make a declaration under this scheme and the system will disallow persons who are not eligible from filing a declaration. However, there is a possibility that such ineligible persons may still make a declaration by selecting an incorrect response.

For instance, under Sr. No. 8.1 of Form SVLDRS-1, the person making a declaration has to indicate whether he/she has been convicted for an offence for the matter for which the declaration is being made. If the answer is ‘Yes’, he cannot proceed further. If a convicted person gives answer as ‘No’, he can proceed.

It has been clarified that such declarations are void and do not merit consideration under the Scheme. Such persons may be informed of their ineligibility through a letter.

2. Under section 125(1)(a), this Scheme shall not be applicable in cases where an appeal and final hearing has been taken place on or before 30th June 2019. Cases under adjudication are also excluded. It has been clarified that cases may still fall under the arrears category and exclusion shall be applicable. Once the appellate or adjudication order is passed and has attained finality or appeal period is over, scheme will be applicable.

3. Section 121(c) defines an “amount in arrears” which means amount of duty which is recoverable as arrears of duty, on account of-

i) no appeal having been filed by the declarant against an order or order in appeal before the expiry of the period of time for filing of appeal

ii) an order in appeal relating to the declarant attaining finality

In case if the taxpayer does not wish to file an appeal even though the time period is not over, he can file a declaration under this scheme provided he gives in writing to the department that he will not file an appeal.

4. Section 123 defines ‘tax dues’ in respect of arrears as the amount which is due in arrears In other words, tax dues are the amount of duty which is outstanding against the declarant. This is the net amount after deducting the dues that he has already paid. It has been clarified that the relief available under Section 124(1)(c) will be applied to the net outstanding amount.

Illustration: Taxpayer has outstanding arrears of Rs. 1 crore in which he has already paid Rs. 60 lakhs. So, the amount of tax dues is Rs 40 lakhs. After applying applicable relief @ 60%, the amount payable under the Scheme is Rs 16 lakhs

5. Section 124(1)(a) outlines the relief available in the case of one or more appeals arising out of a Show Cause Notice. Such an appeal may have been filed either by the party or by the department. Section 127(6) provides for deemed withdrawal of such appeals filed by a declarant pending at a forum other than the Supreme Court or High Court. It has been clarified that such deemed withdrawal will also be applicable for departmental appeals.

6. One of the category of cases for which a declaration can be made under the Scheme is where the declarant has filed a return but not paid duty which happens in case filing multiple return. In such cases under rule 3 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, separate declaration shall be filed for each case.

7. Section 125(1)(f) bars a person from making voluntary disclosure after being subjected to an enquiry or investigation or audit.

8. Taxpayer may in some cases deposit the duty without interest on being pointed out by audit etc. In such cases, a show cause notice is generally issued for appropriating the duty deposited and demanding the applicable interest. It is clarified that such cases are covered under the Scheme.

Click here to read the notification.

Click here to read more on Scheme.