The new scheme envisages settlement of the legacy indirect tax disputes under central laws, covering central excise, service tax laws, cesses and 26 other laws.
Tax dues that could be settled under the scheme include arrears arising out of an order, show-cause notice, enquiry/investigation/audit, voluntary disclosure by the declarant, or admitted tax not paid under central taxation legislation which is pending as on June 30, 2019.
What are the relief measures offered in the new scheme?
The relief varies from 40 to 70 per cent of the tax amount. If arrears are in the nature of late fee/penalty, they are waived, provided there are no tax dues. The amount already paid/pre-deposited could be reduced from the amount payable under the scheme. However, any excess payment cannot be claimed as a refund. Further, the amount payable under the scheme cannot be claimed by way of input tax credit.
How is the new scheme different from earlier ones?
The Voluntary Compliance Encouragement Scheme (VCES) offered a waiver of interest and penalty. However, the new scheme offers waiver of tax dues itself, apart from interest and penalty (also prosecution). The Finance Bill, 2019, notes that the scheme “…provides for certain immunities including penalty, interest or any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1944 to those persons who pay the declared tax dues”.
“The waiver/reduction of duty/tax/cess liability itself is a unique feature of the new scheme,” says Pritam Mahure, a Pune-based chartered accountant and GST expert.
However, the flip side is that the scheme does not apply to certain cases. Also, any amount deposited earlier during enquiry or audit will not be eligible for the benefit under the scheme, adds Mahure.
Experts say the VCES scheme announced in 2013 covered only unpaid service tax dues, while the new scheme covers disputes covering both excise and service tax.
What does the government need to do to ensure this new scheme delivers better results than its predecessors?
The scheme should not have any restriction in terms of coverage, procedure to be followed, admission of cases, etc, so that businesses can come forward and close pending disputes, says MS Mani, partner, Deloitte.