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Don’t miss the bus: Sabka Vishwas scheme a unique opportunity for businesses to clean tax slate

The scheme is a determined bid by the Ministry of Finance, Government of India to dent the huge body of litigation in indirect taxes. Image: PTI
  • By Sanjay Rathi

SVLDRS 2019, which commenced from 1 st September 2019, strives to provide the erstwhile Central Excise and Service Tax assesses an opportunity to clean up their slates by settling their outstanding litigations and dues. It is a determined bid by the Ministry of Finance, Government of India to dent the huge body of litigation in indirect taxes. Revenue worth several lac crores is stuck up in Central Excise and Service Tax litigation at various levels and in the ordinary course would take years to settle. The scheme is therefore an unprecedented opportunity for the trade and businesses. For the department too it is an opportunity to wipe off its legacy clutter and concentrate better on
administering GST which as on date is still in its infancy.

An unprejuidiced look at the features of the Scheme makes it apparent that it is undoubtedly the best ever scheme of its type. Its earlier embodiments viz. the Kar Vivad Samadhan Scheme of 1998 (KVSS) and the Voluntary Compliance Encouragement Scheme of 2013 (VCES, which was exclusively for Service Tax assessees) were restricted in ambit and scope, as only limited waivers were provided. SVLDRS-2019 therefore is a much improved avatar since it provides for waiver of as much as 70% of the main tax dues, coupled with full waiver of penalty, interest and prosecution. Abandonment of as much as 70% of tax dues! Truly incredible! It doesn’t get any better than this!

Added to the unparalleled waiver is the fact that the scheme is applicable to all types of disputes. Any assessee in litigation at any level, be it Supreme Court, High Court, Tribunal or Commissioner (Appeals), is eligible. Declaration can also be filed with respect to a Show Cause Notice which is yet to be adjudicated and even with respect to recent investigations/audit undertaken by the department. Even cases of unpaid arrears will be entertained. Most importantly the scheme allows an assessee to make a voluntary disclosure as well, the same being accepted on face value with no questions asked. Yet another remarkable facet of the scheme is its complete facelessness. All actions by a declarant viz filing of declaration, payment of dues as well as all communications with the department are totally online. There is no reason nor requirement for a declarant to meet any departmental officer thereby obviating any chances of harassment and/or complaints.

The next absolutely enticing facet of the scheme is its simplicity and the ease of application. Anybody desirous of filing a declaration under the scheme has to only log onto the website https://www.cbic-gst.gov.in which is extremely user-fiendly. Even the calculation of the amounts liable to be paid by the declarant is done by the website itself, the relevant columns getting auto populated. Can anything be better than this?

A not to be ignored aspect of the Scheme is that the filed declaration gets attended to at very senior levels in the department. The Designated Committees empowered to process the declarations consist of officers of at least the rank of an Assistant Commissioner and therefore the declaration gets the most careful dealing. Yet another remarkable facet of the scheme is its time bound nature. All processes once the declaration has been filed are by law stipulated to be concluded in preset time frames. A declarant is bound to receive his discharge certificate in a maximum of four months from the date of filing of declaration, there being no question of any interminable wait.

Performance so far

It has been more than 100 days since the inception of the scheme and the time is ripe to assess its impact on the ground. Statistically, as on 17 th December, 2019, 59,772 declarations have been filed across the country and the department is slated to recover Rs. 3,475 crores as revenue. At a first glance, the statistics especially, revenue the liable to be recovered figure would seem to indicate that the scheme is not getting the desired traction, but such an assessment would be pre-mature and misleading. It is imperative to note at this juncture that at the onset of the scheme, no formal targets were assigned.

One of the plausible reasons behind the less than expected declarations seems that declarants are targeting the last days of the scheme, which would appear logical since the earlier the declaration is filed, the sooner the due tax would have to be deposited. Such declarants should note that tax issues are best disposed of at the earliest. A deluge is likely towards the end of scheme which could lead to server overload problems. However if the last fortnight is any indication, the declarants seem to be pressing the pedal as the receipt of declarations has recorded a remarkable improvement.

A publicity blitz has been launched by the department across the country. The newspapers, including the vernacular are fill of adverts. The FM Radio keeps reminding its listeners the features of the scheme. Hoardings sporting SVLDRS features are visible at vantage points across the country. What is missing is a television campaign, which presumably is on the anvil. Notwithstanding these efforts, the departmental employees have a special role to play if the scheme is to be a success. Each potential declarant has to be identified, contacted and convinced to participate. The department and its employees better not lose sight of the fact that the success of the scheme is in national interest and it is not only their departmental but a moral responsibility too to make it successful.

Departmental interaction with the trade indicates that one of the reasons behind the tepid response is the expectation of another such scheme 5-6 years from now. Such people should note that SVLDRS was necessitated since the legacy junk was not allowing concentration on GST implementation. There would be no equivalent reason to launch another such scheme in another 10, 20 or even 30 years.

Indisputably, the responsibility of making a success of such an unparalleled and unrivalled scheme lies mainly with the Indian business, trade and industry. By paying a mere 30 percent, a potential declarant gets a total waiver of interest, penalty and prosecution. Those still mulling about filing declaration should not forget that expenditure on long standing litigation can be more than the amount liable to be paid under the scheme. It makes perfect business sense to settle litigation once and for all, the merits notwithstanding and to turn financial statements clean. Also noteworthy is the peace of mind which will automatically ensue once the declarant receives a discharge certificate. The latter argument is especially true for smaller assessees who have petty amounts caught up in litigation.

All concerned should remember that such a pioneering, ground breaking & exceptional scheme with such attractive features is unlikely to be witnessed in future and prudence lies in subscribing to it. In fact the success of the scheme would be a barometer of the maturity of Indian business, trade & industry.

  • Sanjay Rathi is IRS Commissioner, Nagpur-II GST Commissionerate.

Source: Financial Express