Legacy Dispute Resolution to help MSMEs settle service tax, excise litigation cases
Around 1.30 lakh legacy cases of service tax and excise duty amounting to Rs 3.75 lakh crore are locked up in litigation, wherein Rs 2.5 lakh crore is service tax and Rs 1.25 lakh crore is excise.
With Rs 3.75 lakh crore locked up in service tax and excise duty litigation, the government has sought to give relief to MSMEs by setting a Rs 50 lakh cut-off for deciding the extent of relief on tax dues provided under the proposed dispute resolution-cum-amnesty scheme, said Sandeep Bhatnagar, Central Board of Indirect Taxes and Customs (CBIC) member, GST.
About 1.30 lakh legacy cases of service tax, and excise duty amounting to Rs 3.75 lakh crore are locked up in litigation, wherein Rs 2.5 lakh crore is service tax and the remaining Rs 1.25 lakh crore is excise.
The 'Sabka Vishwas Legacy Dispute Resolution Scheme, 2019' announced in Budget 2019-20 provides for waiver of interest and penalty in excise and service tax cases which are locked up in litigation in various forums whether adjudicating authority or High Court or Supreme Court. These businesses would also not face prosecution in case they avail the scheme.
"We expect small and medium taxpayers to have duty demands of up to Rs 50 lakh. No hard and fast rules, but that's the thinking which went into it. So, the relief is in terms of 70 percent of the duty or 60 percent of the duty," he said.
The relief under the scheme would vary from 40 percent to 70 percent of taxes due, depending on the amount involved, and the proposed dispute resolution-cum-amnesty scheme covers past cases involving taxes which have got subsumed in GST, namely Central Excise, Service Tax and cess.
"The government's intent was since GST has come, our businessmen should not waste time or labour on litigation of legacy taxes which have been subsumed in GST. Even the government would be free of the burden of chasing these (revenues). It is a great scheme and another plus point is that it is a fully automated scheme," Bhatnagar said.
In Budget 2013, the government had come out with Service Tax Voluntary Compliance Encouragement Scheme (VCES) to give an opportunity to service tax defaulters to pay dues and come clean. VCES was introduced as one-time amnesty scheme for paying service tax dues for the period October 1, 2007 to December 31, 2012, without interest and penalty.
"We had another scheme in 2013 VCES. Those are schemes which did some good, but frankly they were not well accepted by the trade. There were fundamental problems in the scheme," Bhatnagar said, adding that the CBIC has learnt from that experience and has drafted the new scheme announced in Budget 2019.