'SABKA VISHWAS': LEGACY DISTRIBUTION RESOLUTION SCHEME
GS 2 – Government policies and interventions of development in various sectors and issues arising out of their implementation
In line with the intent of reducing pendency of litigations under the erstwhile indirect tax regime and in the process, unlock the huge amount of revenue, estimated to be approximately Rs.3.75 lakh crore, stuck in such litigations, the government has proposed to introduce a new scheme called the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Scheme offers assesses quick resolution of disputes under the erstwhile Central Excise Act and Service tax legislation, wherein, the cases can be closed permanently by making a part payment of the disputed amount.
Legal dispute resolution
The legal system provides resolutions for many different types of disputes. Some disputants will not reach agreement through a collaborative process. Some disputes need the coercive power of the state to enforce a resolution. Perhaps more importantly, many people want a professional advocate when they become involved in a dispute, particularly if the dispute involves perceived legal rights, legal wrongdoing, or threat of legal action against them.
The most common form of judicial dispute resolution is litigation. Litigation is initiated when one party files suit against another. In the United States, litigation is facilitated by the government within federal, state, and municipal courts. The proceedings are very formal and are governed by rules, such as rules of evidence and procedure, which are established by the legislature. Outcomes are decided by an impartial judge and/or jury, based on the factual questions of the case and the application law.
Alternative Dispute Resolution
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a substitute to the conventional methods of resolving disputes. ADR offers to resolve all type of matters including civil, commercial, industrial and family etc., where people are not being able to start any type of negotiation and reach the settlement. Generally, ADR uses neutral third party who helps the parties to communicate, discuss the differences and resolve the dispute. It is a method which enables individuals and group to maintain co-operation, social order and provides opportunity to reduce hostility.
Applicability of the Scheme
The Scheme is applicable to disputes pending under the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or Chapter V of the Finance Act, 1994 (Service tax) and the rules made thereunder. The Scheme is also applicable to disputes pending under 26 other Acts which provided for levy of Cess in addition to Central Excise duty or Service tax. The Scheme will apply in cases where a show cause notice has been issued to an assesse and final hearing has not happened before 30th June 2019, or an appeal has been filed against any order which is where final hearing has not happened as on 30th June 2019, or where an audit/ investigation or enquiry is ongoing and the amount has been quantified before 30th June 2019.
The assesse can also use the scheme to make payment of ‘amount due in arrears’ or any other tax amount which is disclosed voluntarily by the assesse. ‘Amount in arrears’ has been defined to mean any tax/ duty, interest and penalty which has become due on account of any order in original or order in appeal passed against the assesse and where no appeal has been filed within the limitation period by the assesse against such order or where any amount of tax is disclosed in the return as being payable but has not been paid yet.
How is the Claim to be filed?
An application will be required to be filed in such manner as may be prescribed. The designated committee shall verify the correctness of the declaration made by the assessee except in case of voluntary disclosure. Thereafter, the designated committee shall issue in electronic form, a statement, indicating the amount payable by the declarant, within a specified period from the date of receipt of the said declaration.
The Scheme, on the face of it, seems quite attractive for the tax payer and the government is in fact taking a big hair cut on the disputed amount. What needs to be seen is how soon can the government set-up this mechanism and how smoothly cases are closed, as that alone now holds the key to the success of this Scheme.
Previous Year Questions