DECEMBER 05, 2024

By K S Naveen Kumar, B.Com., LL.B., ML(Contracts), Advocate, Bengaluru

A. Prelude:

GST litigation has picked up momentum and the stage is all set for activating the GST Tribunal where many disputes involving deeper appreciation of facts, law and evidence would be taken up. Be that as it may, the trade and industry is still grappling with many tax disputes relating to past regime (legacy cases), which could not be resolved even after introduction of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS, 2019) . To free them from such disputes and possible exposure, the Government should explore the possibility of another amnesty scheme on the lines of SVLDRS. In fact, many States were able to bring down the VAT/commercial taxes disputes by introducing Samadhan Schemes at frequent intervals. This would go a long way in reducing the burden on CESTAT 1 and departmental authorities (both adjudication and appellate level).

B. Nature of disputes to be covered:

The scheme should cover all types of disputes under Central Excise and Service Tax without any exception, at whatever level it is, from adjudication to Supreme Court level or even uncontested matters involving arrears of tax/duty and other amounts. Apart from Central Excise and Service Tax it should cover Customs matters too particularly disputes relating to classification, exemption, valuation, export obligation non-fulfillment, FTP benefits. This would ensure that the scheme is made available uniformly to all litigants and the chances of resolution would be more.

C. Scheme for settling disputes:

a. A suitable dispute resolution scheme should be offered in the Union Budget for 2025-26 to resolve duty/tax disputes, which are pending at various stages.

b. The scheme can be conceptualised on the lines of SVLDRS, 2019 keeping in mind the principles laid down by various High Courts in certain matters, where the Designated Committee had denied the benefit.

c. Immunity from prosecution needs to be given and pending prosecution should be withdrawn.

d. The pre-deposits or payments of taxes made already at whatever stage should be automatically adjusted towards the payment due under the dispute resolution scheme, irrespective of whether it was captured/appropriated in the notice or order.

e. Even amounts paid towards interest/penalty during the pendency of dispute should be adjusted towards the tax dues since interest and penalty would be waived under the scheme.

f. In case where the litigant is any Government Department (Centre/State) or Public Sector Undertaking or Government undertaking, the matter should be referred to an inter-ministerial Committee, which would decide whether the matter should be withdrawn or agitated based on criteria like precedent value, stakes involved and other implications.

D. Benefits of Dispute Settlement:

a. This would encourage the trade and industry to focus on business and many litigants would opt for it to buy peace with the department and avoid protracted litigation.

b. Many matters, which are pending before various forums involve issues where only penalties are contested. Such matters could be put to rest under the scheme.

c. This would reduce the number of disputes pending before the authorities, courts and tribunals.

d. Even the Government would realise substantial revenue within a short duration.

e. It would certainly lead to ‘ease of doing business', which would benefit the industry and business community.

E. Conclusion:

If the past disputes are allowed to continue then the adjudicating/appellate authorities and Courts would be pre-occupied and burdened with old cases and would not have time to resolve any issues/disputes cropping up under GST law. GST regime has already seen a spate of litigation and hence it is better to wave the olive branch by introducing a Samadhan scheme to settle past disputes.

[The views expressed are strictly personal.]

1 Customs, Excise and Service Tax Appellate Tribunal (CESTAT)