Latest clarification issued on various aspects of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Only the persons who are eligible in terms of Section 125 can file a declaration under the Scheme. The eligibility conditions are captured in Form SVLDRS-1 (Sr. No. 8). The system automatically disallows 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 and hence allowed to proceed further by the system and able to file a declaration.

Selecting incorrect category of eligibility being an ineligible person:

• Such declarations are void and do not merit consideration under the Scheme. Such persons may be informed of their ineligibility through a letter.

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Section 124(1)(a) outlines the relief available in the case of one or more appeals arising out of a Show Cause Notice, which may have been filed either by the party or by the department. Further, 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.

Deemed withdrawal of departmental appeal:

• Such deemed withdrawal will also be applicable for departmental appeals.
• Where a departmental appeal, reference or writ petition is pending before the Supreme Court or High Court, the department will file an application for withdrawal of such appeal, reference or writ petition after issuance of the discharge certificate.
• Similarly, if prosecution has already been launched, the procedure as laid down in Circular No. 1009/16/2015-CX dated 23-10-2015 should be followed for withdrawal of prosecution after issuance of discharge certificate.

• Rule 3 of the Scheme provides that a separate declaration shall be filed for each case.
• Further, in terms of the Explanation to Rule 3, in case of arrears, a case means ‘an amount in arrears’.
• Section 121(c)(iii) defines an “amount in arrears” as the duty recoverable on account of the declarant having filed a return but not paying duty.
• Since the amount in arrears pertains to a return, a separate declaration will need to be filed for each such return.

Section 121(c) defines an amount in arrears as the amount of duty which is recoverable as arrears of duty. Further, Section 123 defines ‘tax dues’ in respect of arrears as the amount which is due in arrears.

In case of amount in arrears, relief will be applied to the net outstanding amounts after deducting pre-deposits:

• Tax dues is the amount of duty which is outstanding against the declarant. This is the net amount after deducting the dues that he has already paid, which may be in the form of pre-deposits appropriated or paid subsequently by the taxpayer voluntarily against the outstanding amount.
• The relief available under Section 124(1)(c) will be applied to the net outstanding amount so arrived at.
• In respect of all other category, any money paid before its appropriation is in the nature of a deposit only. Hence, in respect of declarations made under these other category, the relief will be applied to the outstanding amount and, only thereafter the pre-deposits/deposits [Section 124(2)] shall be adjusted.

The same is illustrated as follows:

(a)      Taxpayer has outstanding arrears of confirmed duty demand of Rs. 1 crore and 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.

(b)      Taxpayer has outstanding arrears of confirmed duty demand of Rs 1 crore apart from Rs 20 lakh penalty and interest as applicable. He has already paid Rs 1 cr towards duty. So, the amount of tax dues is zero, and the amount payable under the Scheme is zero.

5.

It may so happen that on being pointed out by audit etc, the taxpayer may in some cases deposit the duty without interest. In such cases, a Show Cause Notice is generally issued for appropriating the duty deposited and demanding the applicable interest.

SCN pertaining to demand of interest only is covered under the Scheme:

• It is clarified that such cases are covered under the Scheme. However, in no case will a refund of the duty paid be made to the taxpayer

6.

Section 125(1)(f) bars a person from making voluntary disclosure after being subjected to an enquiry or investigation or audit. Further, what constitutes an enquiry or investigation or audit has also been defined [Sections 121(g) and 121(m)].

A doubt has been expressed as to whether benefit of the Scheme would be available in cases where documents like balance sheet, profit and loss account etc. are called for by department, while quoting authority of Section 14 of the Central Excise Act, 1944 etc.

Designated Committee to take view on cases where only documents are called upon by the department:

• It is clarified that the Designated Committee concerned may take a view on merit, taking into account the facts and circumstances of each case as to whether the provisions of Section 125(1)(f) are attracted in such cases.

7.

Section 125(1)(a) excludes cases which are under appeal and where final hearing has taken place on or before June 30, 2019 from the purview of the Scheme. Similar exclusion has been made applicable, mutatis mutandis, under Section 125(1)(c) to cases under adjudication.

Eligibility of appeals where final hearing is done till June 30, 2019 under arrears category:

• It is clarified that such cases, however, may still fall under the arrears category once the appellate or adjudication order, as the case may be, is passed and has attained finality or appeal period is over, and other requirements under the Scheme are fulfilled.

Section 121(c) (i) and (ii) define “an amount in arrears” as the amount of duty which is recoverable, inter alia, on account of 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 or the order in appeal having attained finality.

There may be situations where the taxpayer does not want to file an appeal even though the time period for filing of appeal is not over.

Declaration by taxpayer that he will not file appeal to be eligible under the Scheme:

·       It is clarified that in such cases, the taxpayer can file a declaration under the Scheme provided he gives in writing to the department that he will not file an appeal. This declaration shall be binding on the taxpayer.