Govt considering amnesty scheme

The government is considering the launch of a onetime amnesty plan for the resolution of legacy disputes pertaining to customs duty after the success of two initiatives taken in the previous two budgets -Sabka Vishwas for settlement of excise and service tax cases, and Vivad se Vishwas for income-tax issues, two people aware of the matter said on condition of anonymity.

Industry has been demanding that they be given a chance to resolve past disputes related to customs in line with the two schemes. The government is actively considering the demand, the people cited above added. The government and businesses are embroiled in legacy disputes such as customs classification, disagreement over valuation and rules of origin issues, they added.

“Previous dispute resolution schemes have been highly successful. They helped people, especially small businesses, immensely in getting rid of their past baggage of disputes and move ahead with a clear slate. A similar scheme is expected, possibly in this budget,” one of the officials said.

Finance minister Nirmala Sitharaman had proposed the first legacy dispute resolution mechanism for central excise and service tax in her first budget, presented on July 5, 2019, for smoother functioning of the newly introduced Goods and Services Tax (GST) regime.

“GST has just completed two years. An area that concerns me is that we have huge pending litigations from pre-gst regime. More than ₹3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow business to move on,” she had said in her budget speech.

In the next budget on February 1 last year, she proposed

Vivad se Vishwas (No Dispute, but Trust) for reducing litigations even in the direct taxes regime. “I hope that taxpayers will make use of this opportunity to get relief from vexatious litigation process,” she had said.

Sabka Vishwas legacy dispute resolution scheme (SVLDRS) was introduced on September 1, 2019 with the objective of reducing litigation. The direct tax

Vivad se Vishwas scheme is still under operation; the last date to avail of the scheme is January 31.

“An amnesty scheme on the lines of Vivad se Vishwas or other similar schemes (SVLDRS) might be a welcome decision but would largely be dependent on the implementation,” said Ranjeet Mahtani, partner at consulting firm Dhruva Advisors LLP.