Taxation

SVLDRS -Sabka Vishwas (Legacy Dispute Resolution) Scheme

The Sabka Vishwas Legacy Dispute Resolution Scheme, hereinafter mentioned as the “SVLDRS,” is a scheme made available for the pre-GST taxpayers. It was introduced with a view to resolve the tax disputes of taxpayers. It was proposed in the Union Budget of 2019 and was introduced to resolve disputes under GST. In this article, we shall look at the SVLDRS in detail.

What is the SVLDRS (Sabka Vishwas Legacy Dispute Resolution Scheme) all about?

The scheme is for taxpayers who seek to close their pending disputes with a substantial relief provided by the government. This scheme provided relief to the taxpayers in the form of Dispute Resolution and Amnesty. The scheme was introduced with the intention of focusing on GST by clearing all litigations pending with regards to the previous tax regime.

This scheme also provides an opportunity to non-compliant taxpayers for voluntary disclosure option.

Main Features of this Scheme

• Facility for the adjustment of any deposits of duty already made.
• A full and final closure of proceedings in question.
• Proceedings under this scheme will not be treated as a precedent for past as well as future liabilities.
• No final decision without the opportunity for personal hearing.
• Fully automated proceedings.

To which all enactments does the SVLDRS apply?

There are 26 enactments to which this scheme applies. They are as follows:

• The Agricultural Produce Cess Act, 1940;
• The Coffee Act, 1942;
• The Rubber Act, 1947;
• Mica Mines Labour Welfare Fund Act, 1946;
• The Salt Cess Act, 1953;
• Medicinal & Toilet Preparations (Excise Duties) Act, 1955;
• Additional Duties of Excise (Goods of Special Importance)Act, 1957;
• The Sugar (Special Excise Duty) Act, 1959;
• Mineral Products (Additional Duties of Excise & Customs) Act, 1958;
• The Textiles Committee Act, 1963;
• The Produce Cess Act, 1966;
• Coal Mines (Conservation and Development) Act, 1974;
• Limestone and Dolomite Mines Labour Welfare Fund Act, 1972;
• The Oil Industry (Development) Act, 1974;
• The Tobacco Cess Act, 1975;
• The Bidi Workers Welfare Cess Act, 1976;
• The Additional Duties of Excise (Textile and Textile Articles) Act, 1978;
• The Iron, Manganese and Chrome Ore Mines Labour Welfare Cess Act, 1976;
• The Sugar Cess Act, 1982;
• Jute Manufacturers Cess Act, 1983;
• Spice Cess Act, 1986;
• Finance Act of 2004, 2007, 2015 and 2016.

Cases covered under the SVLDRS

The following cases are covered under this scheme:

• Show cause notice or an appeal arising out of a pending show cause notice as on 30^th June, 2019;
• An amount in arrears;
• Enquiry, investigation, or an audit where the amount is quantified on or before  30^th June, 2019;
• Voluntary Disclosure.

Cases Excluded-

• Cases of excisable goods set forth in IV schedule to the Central Excise Act, 1944^[1];
• Cases for which a taxpayer is convicted under the Central Excise Act, 1944 or Finance Act;
• Cases involving erroneous refunds;
• Cases pending before the Settlement Commission.

Benefits of the Sabka Vishwas Legacy Dispute Resolution Scheme

The following are its benefits:

• Taxpayers can pay the outstanding tax amounts that they owe and be free from penal consequences.
• Taxpayers will get relief under this scheme in the form of a full waiver of interest and penalties and fines.
•  There shall be a complete amnesty from prosecution proceedings.

Relief under the SVLDRS

This scheme provides a relief margin on all duty demands from 40% to 70% of the demand, except in case of voluntary disclosure.

The relief shall be as follows:

Relief from the duty demand	For cases pending Adjudication or appeal		For cases of confirmed duty demands where no appeals are pending		Cases of Voluntary Disclosure
Duty Demands up to 50 lakh rupees	70%	60%		Full amount of duty disclosed
Duty Demands more than 50 lakh rupees	50%	40%

Restrictions of this scheme

The following restrictions are placed under this scheme:

• The amount to be paid shall not be paid through input tax credit account;
• The tax dues shall not be refundable under any circumstances;
• The amount paid can’t be taken as input tax credit or it doesn’t allow any person to take the input tax credit as a recipient;
• In case where pre-deposit exceeds payment, refund won’t be available. 

How does this scheme function?

The SVLDRS functions in the following manner:

• The declaration is filed electronically and for each case, a separate declaration is filed;
• A unique reference number is generated by the system on the receipt of declaration;
• Based on the particulars furnished by the declarant and based on the records that are available, the designated committee will verify the submitted declaration;
• Within 60 days from the date of receipt of declaration, a statement will be issued by the designated committee with the particulars of the amount payable;
• In case where the estimated amount payable is more than what is declared by the declarant, then the designated committee shall issue an estimate of the amount payable within 30 days from the date of receipt of declaration;
• Within 30 days, the declarant should pay the amount specified in Form SVLDRS-3;
• The proof of withdrawal of appeal or the writ petition filed before HC or Supreme Court should be furnished by the declarant;
• The designated committee shall issue a discharge certificate within 30 days of payment.

Conclusion

The SVLDRS, 2019 was introduced on 1^st Sep 2019 with an objective to reduce litigation relating to legacy taxes. It provided for a full waiver of interest and penalty. It may be noted that the scheme was closed on 30^th June 2020.

Read our article: Casual Taxable Person under GST