The taxation regime in India has witnessed a number of schemes introduced by the Government to lure erring or evading taxpayers, with payment of a lower tax amount against the actual demand, thereby settling the dispute or possible future dispute between the department and the taxpayer.  The Service Tax Voluntary Compliance Encouragement Scheme, 2013 and the Kar Vivad Samadhan Scheme, 1998 are some of the prominent schemes to be noted in this regard.

The tax amnesty schemes are infamous since they are generally perceived as a fraud on honest taxpayers. This argument was echoed in the RK Garg’s case, wherein the Special Bearer Bonds (Immunities and Exception) Act, 1981 was challenged on the ground that the said act neglected and discouraged the tax abiding citizens by supporting tax evaders by providing them immunities and exemptions. The Supreme Court discarded this contention and held that 

“those who have successfully evaded taxation and concealed their income or wealth despite the stringent tax laws and the efforts of the tax department are not likely to disclose their unaccounted money without some inducement by way of immunities and exemptions and it must necessarily be left to the legislature to decide what immunities and exemption would be sufficient for the purpose.”

The Finance Minister, in her maiden Budget Speech on July 05, 2019, expressed her deep concerns about the huge pending litigation and money stuck therein amounting to Rs. 3.75 lac crore under the erstwhile indirect tax regime. To reduce this huge pending litigation, she introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (the “ Scheme”). The Scheme is valid from September 01, 2019 to December 31, 2019. 

The Scheme is a dispute resolution and an amnesty scheme which involves settling of on-going litigation against payment of reduced tax demand and a chance for taxpayers to voluntarily disclose and pay the taxes to be paid by them. The Scheme covers pending litigation right from the show cause notice stage till the appeals before the Supreme Court and extends beyond where the dispute has been against the taxpayer by the Supreme Court, thereby attaining finality.  Broadly, the cases covered under the Scheme includes:

1. a show cause notice or an appeal where the final hearing has not concluded on or before June 30, 2019;
2. amount in arrears i.e. tax demand upheld vide an order in appeal against which no appeal has been preferred and the limitation period has expired; or an order in appeal which has attained finality;
3. an enquiry, investigation or audit where the tax amount is quantified and communicated to the taxpayer on or before June 30, 2019; and 
4. a voluntary disclosure 

and excludes cases for which the taxpayer has been convicted under the erstwhile indirect tax laws cases involving refunds or erroneous refunds, cases pending before the Settlement Commission and cases involving tobacco and specified petroleum products.  

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