CBIC clarifies the applicability of the scheme on pre-GST legacy cases

CBIC has come out with a clarification on the recently introduced SVLDRS, 2019 scheme. The central excise circular dated 25 September 2019 clarifies most-asked trade queries surrounding the eligibility of the scheme.

The Sabka Vishwas (Legacy Dispute Resolution) scheme applies to all those pending cases under the erstwhile indirect tax, duty and cess under the central excise, service tax and 26 other enactments. The type of legacy case must be specifically laid down as per the document of the scheme notified on 27th August 2019. The rest will not be covered by the benefits of the scheme.

The trade has been cautioned to exercise due diligence before making a declaration in the form-SVLDRS-1. The form can be submitted online on the CBIC website and is designed to flush out all the ineligible applications at the source itself. However, the clarification states that there are some cases where applications get processed first, but later become void.

Assesses inadvertently make mistakes while filling up the form. For example, while filling up the application, if a taxpayer chooses ‘Yes’ by mistake against whether or not he is convicted for an offence, even though the application gets submitted online, it will not be processed further. 

It is also clarified that the declaration in SVLDRS-1 must be separately submitted for each legacy case. Further, it specifies that every case having the tax dues pertaining to just one return can be taken up in one declaration form at a time. It applies to circumstances where the excise or service tax return was filed without the payment of duty.

Also Read: Hotel Stocks Shoot up Post GST Rate Cut on Hotel Room Tariffs

Another doubt has been put to rest. The base amount on which relief will be calculated has now been clarified for two different cases. The first one pertains to cases where there is an amount of duty arrears pending where no appeal is preferred or where a return was filed with liability but no tax is discharged, one or before 30 June 2019.

Here, the relief is calculated on the net amount outstanding after adjusting any pre-deposit amounts or voluntary discharge. The second case involves pending tax dues which are under appeal, audit, enquiry or investigations.

In such cases, the relief under the scheme is calculated on the amount of gross outstanding tax arrears without considering the deposit amounts, as these are yet to be adjusted due to pending disputes. The relief is either 40% or 60% of the tax dues.

Any taxes pointed out in the audit and paid by the taxpayer shall not be available for refund under the scheme. Apart from the cases of audit, enquiry or investigation specifically defined under the scheme, there are cases where the department had called for the financial statements under Section 14 of the Central Excise Act. Such cases could still be covered by the scheme. However, the committee under the scheme will decide on a case-to-case basis whether the benefits of the scheme should be extended to them.

All taxpayers having pending disputes under pre-GST regime shall make use of the scheme between 1 September 2019 and 31 December 2019.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in