UPDATE ON CONTRADICTIONS IN SABKA VISHWAS SCHEME, 2019- SCHEME PART-2

UPDATE ON CONTRADICTIONS IN SABKA VISHWAS SCHEME, 2019- SCHEME PART-2

In our earlier update, we had discussed about the eligibility criteria for filing declaration under newly proposed Amnesty Scheme- “SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019”. The present update seeks to discuss other provisions of this scheme.

The meaning of the term ‘tax dues’ as given in the Scheme is discussed as follows:-

“Tax dues” means—

(a) where—

(i) a single appeal arising out of an order is pending as on the 30^th day of June, 2019 before the appellate forum, the total amount of duty which is being disputed in the said appeal;

(ii) more than one appeal arising out of an order, one by the declarant and the other being a departmental appeal, which are pending as on the 30^th day of June, 2019 before the appellate forum, the sum of the amount of duty which is being disputed by the declarant in his appeal and the amount of duty being disputed in the departmental appeal:

Provided that nothing contained in the above clauses shall be applicable where such an appeal has been heard finally on or before the 30^th day of June, 2019.

To illustrate- If show cause notice has been issued for duty of Rs. 1500/- along with equal penalty but order confirmed duty of Rs. 1,000/- along with penalty of Rs. 1,000/-. The assessee preferred appeal for the duty confirmed of Rs. 1,000/- and department preferred appeal for the duty dropped to the extent of Rs. 500/-. Therefore, the tax dues would be taken as Rs. 1,000+ Rs. 500.

(b) where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30^th June, 2019, then, the amount of duty stated to be payable by the declarant in the said notice:

Provided that if the said notice has been issued to the declarant and other persons making them jointly and severally liable for an amount, then, the amount indicated in the said notice as jointly and severally payable shall be taken to be the amount of duty payable by the declarant;

(c) where an enquiry or investigation or audit is pending against the declarant, the amount of duty payable under any of the indirect tax enactment which has been quantified on or before the 30^th June, 2019;

(d) where the amount has been voluntarily disclosed by the declarant, then, the total amount of duty stated in the declaration;

(e) where an amount in arrears relating to the declarant is due, the amount in arrears.

If we recall the eligibility criteria discussed in our earlier update, it was mentioned in clause (f) of section 124, it is found that following persons cannot make declaration under this scheme-

(f) a person making a voluntary disclosure,—

(i) after being subjected to any enquiry or investigation or audit; or

(ii) having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it;

One may say that the eligibility criteria only debars person making voluntary disclosure after being subject to any enquiry or investigation or audit. An assessee making voluntary disclosure which is not outcome of any enquiry can file declaration under this scheme and in such cases, the amount of tax dues will be the amount of duty stated in the declaration by the assessee. However, in most of the cases, voluntary disclosure is only after conduct of enquiry/audit and so practically, most of the assessees will be excluded from filing the declaration under this scheme.

In continuation to the above, it is highlighted that a person having filed a return under the indirect tax enactment wherein he has indicated an amount of duty as payable but has not paid it is debarred from filing declaration under this scheme. However, the meaning of ‘tax dues’ includes amount in arrears within its scope which is clearly contradictory to the provision of section 124 (f)(ii). The definition of ‘amount in arrears’ includes any amount that is declared in return but not paid by the assessee and so is clearly included in the meaning of tax dues. However, the eligibility criteria exclude assessee making voluntary disclosure in return but not paying tax from filing declaration under this scheme. This is clear contradiction in the provisions of the scheme and a suitable clarification is expected from the government at the earliest possible.

The provisions as regards relief available under this scheme will be discussed in our next update.

This is solely for the educational purpose.

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UPDATE ON CONTRADICTIONS IN SABKA VISHWAS SCHEME, 2019- SCHEME PART-2

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