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 assessee 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 assessee can also use the scheme to make payment of ‘amount due in arrears’ or any other tax amount which is disclosed voluntarily by the assessee. ‘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.

Amount to be paid under the Scheme

The Scheme gives different relief from payment of penalty as well as, substantially reduces the amount of tax required to be paid for assesses opting for the scheme. Below table illustrates the amount required to be paid in different situations

In addition the above, the Scheme also provides that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be adjusted from the tax payable. However, where the amount of pre-deposit is more than the settlement amount indicated in the table above, no refund of the difference shall be given.

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.

Once the amount has been paid, the proceedings shall be deemed to be concluded and no further tax, interest or penalty is liable to be paid. In case the declarant has filed any appeal, writ etc. then first such appeal, writ etc. has to be withdrawn by the assesse before making the payment under the said Scheme. Further, the Scheme specifically provides that in order to make the payment, the assessee cannot utilize input tax credit. Even the amount paid under this scheme as recipient of goods or services cannot be utilized as input tax credit by the assessee.

Conclusion

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.

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