Amnesty scheme for legacy service tax announced, excise duty cases to open on 1st September

Highlights

•    This scheme offers amnesty towards those who wish to disclose any previously undisclosed tax liability.

•    The government expects a huge number of taxpayers to sign up for the scheme as well as close their pending disputes.

The government gives businesses four months towards settling indirect tax disputes

The finance ministry stated the dispute resolution and amnesty scheme in the direction of reducing legacy service tax and central excise cases would become operational for 4 months beginning 1st September.

The ministry had stated in a statement that the most attractive part of the scheme Sabka Vishwas - Legacy Dispute Resolution Scheme, 2019 is that it offers substantial relief in tax dues for every category of cases as well as full waiver of interest, fine, and penalty. It also added that in all these matters, there would be no other liability of interest, fine or penalty, and there is also a thorough amnesty from prosecution.

The scheme would become operational from 1st September and continue till 31st December 2019.

Above Rs 3.75 lakh crore is blocked in service tax as well as excise litigations.

The scheme, started by Finance Minister Nirmala Sitharaman in her Budget speech, is particularly tailored towards free a large number of small taxpayers of their pending disputes with the tax administration.

For all the cases pending in adjudication or plea, in any forum, the scheme provides relief of 70% from the duty demand if it is Rs 50 lakh or less, and 50% if it is above Rs 50 lakh.

"The similar relief is available for cases under investigation as well as audit where the duty involved is quantified and communicated towards the individual or admitted by him in a statement on or before 30th June 2019

Furthermore, for confirmed duty demand, where there is no petition pending, the relief provided is 60% of the confirmed duty total if the same is Rs 50 lakh or below, and 40% if the confirmed duty sum is above Rs 50 lakh.

The ministry also stated that in cases of voluntary disclosure, the individual availing the scheme would have to pay only the full sum of disclosed duty.

The government expects the scheme shall be availed by a large number of taxpayers for closing their pending disputes involving legacy service tax and central excise matters.

The ministry held that there are two main components of the scheme; they are dispute resolution and amnesty.

The dispute resolution component is intended at settling the legacy matters of central excise and service tax that are subsumed in GST and are pending in lawsuit at numerous forums.

The amnesty component provides an opportunity towards the taxpayers to pay the outstanding tax as well as be free of any other consequence under the law.

The statement furthermore stated that as the objective of the scheme is to free as large a section of the taxpayers from the legacy taxes as possible, the relief offered is substantial.

The scheme is particularly tailored towards free a large number of small taxpayers of their pending disputes with the tax administration.

In the meantime, the Central Board of Indirect Taxes and Customs (CBIC) had fixed the monetary limitations for the revenue department towards filing plea at various dispute resolution forums, like CESTAT, High courts, and the Supreme Court.

The financial limit for filing an appeal in CESTAT was fixed at Rs 50 lakh, for high courts Rs 1 crore and for the Supreme Court at Rs 2 crore.

This, the CBIC stated, is being completed with a view to decrease government litigations.

Sabka Vishwas-Legacy Dispute Resolution Scheme 2019

This scheme has been announced by Union Finance Minister Nirmala Sitharaman in her Budget speech 2019 with the intention to free a large number of small taxpayers of their pending disputes with the tax administration. Almost more than Rs 3.75 lakh crore were blocked in excise and service tax litigations.

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Author:

eStartIndia Team