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Indirect Tax Dispute Resolution Scheme (Part-1)
May, 23rd 2016

Indirect tax Dispute Resolution Scheme, 2016, is a scheme wherein in respect of cases pending before Commissioner (Appeals), the assessee, after paying the duty, interest and penalty equivalent to 25% of duty, can file a declaration, has been introduced by Finance Act, 2016. In such cases, the proceedings against the assessee will be closed and he will also get immunity from prosecution. However, this scheme will not apply in certain specified type of cases.

Chapter XI (Clause 212 to 218) of Finance Act, 2016 have inserted provision for Indirect Taxes Dispute Resolution Scheme, 2016 w.e.f. 01.06.2016.

The said scheme provides for settlement of the disputes pending before the Commissioner (Appeals) as on the 1stMarch, 2016, on payment of tax dues along with interest and twenty-five percent of the penalty imposed by the impugned order. The said scheme is applicable to the declarations made upto the 31st day of December, 2016.

The Finance Act, 2016 has inserted a new Chapter XI (section 212 to 218) provide for the Indirect Tax Dispute Resolution Scheme, 2016 (ITDRS). The said Scheme provides for settlement of the disputes pending before the Commissioner (Appeal) as on the 1st March, 2016, on payment of tax dues along with interest and twenty-five percent of the penalty imposed by the impugned order. The said scheme is applicable to the declarations made upto the 31st day of December, 2016.

However, the said scheme shall not apply in the following cases:

(a)Cases where prosecution has already been launched or order relates to search or seizure

(b) Cases involving narcotics and psychotropic substances

(c) Cases involving detention under Conservation ofForeign Exchange & Prevention of Smuggling Activities, 1974 (COFEPOSA)

(d) Offences punishable under Indian Penal Code or Prevention of Corruption Act, 1988

The provisions of ITDRS are as follows –

  212.     Short title, application and commencement

213.     Definitions – declarant, designated authority, impugned order, indirect tax dispute, tax etc.

214.     Procedure for making declaration.

215.     Scheme not to apply in certain cases

216.     Immunity from other proceedings under Act

217.     Consequences of order made under scheme

218.     Power to make rules.

Salient features of the Scheme

(1) Date of Commencement

The ITDRS, 2016 shall commence w.e.f. 1.6.2016 and shall be applicable to all the declarations made up to 31stday of December 2016, i.e., no declarationcan be filed after 31 December 2016.

(2) Applicability

The scheme is a applicable to the following taxes / duties –

  (i) Custom duties under Customs Act, 1962

(ii) Central Excise Duty under Central Excise Act, 1944

(iii) Service Tax under Finance Act, 1994

'Tax' includes duty or tax levied under the provisions of the aforementioned legislations.

(3) Declaration

Declaration  can be made by the 'declarant' i.e., any person who makes declaration under section 214. Designated authority means an officer not below the rank of Assistant Commissioner who has been authorized to Act as Assistant Commissioner by the Commissioner for the Scheme. Declaration can be made in respect of any 'impugned order' which means any order which is under challenge before the Commissioner (Appeals), i.e. only pending appeals have to be considered in the scheme.

(4) Indirect Tax Dispute

'Indirect tax dispute' means a dispute in respect of any of the provisions of the Act which is pending before the Commissioner (Appeals) as an appeal against the impugned order as on the 1st day of March, 2016, i.e.,

(i) Dispute between Department and assessee must be in respect of any of the provisions of customs / central excise / service tax under respective laws

(ii) Dispute must be pending before Commissioner (Appeals) as on 1.3.2016

(iii) Pending dispute should be as an appeal against the impugned order

Thus, what is important for eligibility to opt for scheme is that appeal should have been filed before Commissioner (Appeals) as on 1.3.2016 and it must be pending for disposal. If an order in original has been issued but appeal not filed before or upto 1.3.2016, such disputed demands are not covered. However, cases where appeals have been filed and demand are fully or party stayed / waived, such cases are eligible under ITDRS, 2016.

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