Legacy Dispute Resolution Scheme – An honest reflection of maximum governance minimum government

July 09,2019
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Puneet Bansal, Managing Partner, Nitya Tax

The article has been co-authored by Sneha Ghosh (Associate).


In the Budget speech, the Hon’ble Finance Minister announced a dispute resolution scheme for pending litigations of the erstwhile Indirect tax regime. It aimed to unlock Rs 3.75 lakh crore involved in cases relating to service tax and excise duty. At the first brush, the scheme brought back memories of the government’s dismal attempts earlier vide Voluntary Compliance Encouragement Scheme in 2013 and Indirect Tax Dispute Resolution Scheme in 2016. 

Honestly, we were on the verge to dismiss this scheme as mere travesty. However, a detailed reading of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 (‘Legacy Scheme’) revealed a pragmatic step with a clear intent to alleviate both the taxpayer and the revenue from the ghost of past litigations. 

In this article, we will highlight the salient features of the Legacy Scheme.

The Legacy Scheme is a pro-taxpayer device which allows a taxpayer (‘declarant’) to not only preclude an upcoming litigation but also conclude an identified tax demand. The Legacy Scheme covers the erstwhile Central Indirect Tax laws (including Central Excise Act, 1944; Finance Act, 1994; various Cess legislations etc.). 

The declarant gets an option for settlement of the tax dues right from the stages of arrears of taxes, self-detection, enquiry and audit by the revenue till the matters pending before the Adjudicating Authorities, Appellate Forums as well as Courts till Supreme Court. The ongoing litigations must be pending as on June 30, 2019 i.e. the final hearing in such matters is yet to take place. To that extent, the scope of the Legacy Scheme is widespread to cover any sort of litigations either actual or probable.

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