Following an order by Madhya Pradesh High Court, the Central Board of Indirect Taxes & Custom has said interest arising out of delayed payment of tax dues can be waived off under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Experts say this will benefit assessees as the issue has led to heavy litigation with cases piled up in different courts.
SVLDRS 2019 is a one-time measure for liquidation of past disputes of Central Excise and Service Tax. It was also intended to provide an opportunity of voluntary disclosure to non-compliant taxpayers. The scheme provided total waiver of interest, penalty and fine, immunity from prosecution and relief between 50 and 70 per cent from the duty demand. The scheme is now closed.
The Court, while disposing a petition by Jabalpur-based Sigma Construction, had directed CBIC to dwell upon the question about whether the component of interest arising out of delayed payment of tax dues can be waived under SVLDRS.
Accordingly, citing an October 2019 circular, CBIC has now said that in cases where the assessee has filed ST-3 return on or before June 30, 2019 and has paid the tax dues in full before filing the application, the declarant is eligible to get the benefit of the scheme for waiver of interest. “This shall also include the cases where the interest has been demanded by an SCN/O-i-O.(Show Cause Notice/Order-in-Original),” it said.
According to Saurabh Agarwal, Tax Partner with EY, the latest instruction is clarifying the position that waiver of interest would be available to a taxpayer under the SVLDRS, 2019 where the applicable return was filed on or before June 30, 2019 and tax dues were paid in full before filing of an application under the scheme. “Such extension of benefit will be available for bonafide taxpayers as well who had discharged the tax liability and were facing imposition of interest due to late payment. However, the benefit would be available only to those taxpayers who had applied for the waiver under the scheme,” he said.
Sandeep Sehgal, Partner-Tax with AKM Global, says the CBIC has already clarified in its principal circular that where the full liability is paid, no amount of interest would be payable under the SVLDRS scheme. However, the department rejected the declaration filed by the petitioner on the ground that no liability has been declared in the return as payable but not paid. “The department further contested that the interest payable for the delay in filings should not be a part of the scheme. The recent instruction issued by the CBIC is a welcome move stating that the declarant shall be eligible for the waiver of interest as well under the SVLDRS scheme,” he said.