What is Sabka Vishwas – Legacy Dispute Resolution Scheme?
Sabka Vishwas (LDRS) Scheme, 2019, a dispute resolution and amnesty scheme under GST, shall come into force from September 1, 2019. This Legacy Dispute Resolution Scheme aims to curb the pending litigation under the previous Indirect Tax Enactments (Central Excise, Service Tax and Cesses), which were carried forward to the GST regime. The scheme not only offers relief of a certain percentage from tax dues but also provide taxpayers with an opportunity to clear off the interest and penalty as well.
Points to be noted
- The declarant will not be liable to any prosecution for the given matter.
- However, in case of voluntary disclosure of the taxes, there shall be no relief available in term of tax dues.
- Besides a few exceptions, every person will be able to make a declaration under this Scheme.
- The due amount under this Scheme cannot be paid through the input tax credit (ITC) account.
- The amount paid will be non-refundable, irrespective of the circumstances, and will not be available as an input tax credit (ITC) either.
How to benefit from the Legacy Dispute Resolution scheme?
If a taxpayer is eligible to declare a relief, he is required to follow the below-given steps to avail the benefits of the scheme:
- Declaration for seeking relief shall be made electronically in a prescribed manner.
- All declarations will be examined by a designated committee, to be constituted, for the purpose of finalising the amounts payable by the declarant to avail the relief under the Scheme.
- Where the designated committee’s estimates of the amount payable exceed the estimates made by the declarant, then the declarant would be given an opportunity of being heard before the amount payable is finalised.
- The designated committee, upon finalising the amounts payable by the declarant, would issue a statement in this regard.
- Adjudication/appellate proceedings concerning the matters covered by the declaration up to the Tribunal stage would be deemed withdrawn; while proceedings pending before the High Court and Supreme Court will have to be withdrawn through a written application in this regard.
- The relief under the Scheme would be confirmed by way issuance of a discharge certificate once the declarant evidences the payment of the amount as per designated committee’s statement and the withdrawal of proceedings before the High Court and the Supreme Court.
- Timelines for all actionable items by the designated committee and the declarant are also prescribed.
- Any amount paid under the Scheme will neither be refunded nor be recovered in the form of input tax credit or in any form for that matter.
- The tax dues cannot be paid through the utilisation of input tax credit.
- Other administrative and procedural contours of the Scheme including without limitation start and end date of the scheme, manner of declaration and verification, constitution and functioning of the designated committee, and more, would be prescribed in due course of time.
What is a Discharge Certificate?
Upon the resolution of the dispute, the declarant shall be issued a Discharge Certificate, effective with the follows
- No further payments of any amount by way of tax/duty, interest and penalty will be applicable.
- No further proceedings and prosecutions will take place.
- No re-opening of the matter under any circumstances.
- However, the above consequences would be limited cumulatively to the matters and the time-period covered by the declaration under the Scheme.
How will the relief be determined?
The relief available for the declarant shall be determined on the basis of the Situation and the amount of tax due, as given below:
|Situation||Relief (If the due amount exceeds Rs 50 lakhs)||Relief (If the due amount is less than Rs. 50 lakhs)|
|An SCN or one/more appeals arising out of such notice||50% of the Tax Dues||70% of the Tax Dues|
|SCN for a late fee or penalty only with underlying tax/duty demand either being fully paid already or being NIL||
Entire amount of late fee and/or penalty,
as the case may be
|Arrears (as reported in the return)||40% of the Tax Dues||60% of the Tax Dues|
|Arrears – others||40% of the Tax Dues||60% of the Tax Dues|
|Enquiry or Investigation or Audit||50% of the Tax Dues||70% of the Tax Dues|
P.S: If the declarant has already paid an amount as a deposit/pre-deposit in appellate proceedings or in the course of enquiry/investigation/audit, the given amount would be adjustable against the sum payable by the declarant. However, if the paid amount exceeds the amount payable after considering the tax relief, no refund of such amount shall be available.
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