Analysis of Indirect Tax Dispute Resolution Scheme, 2016 (IDRS)
Indirect Tax Dispute Resolution Scheme, 2016 (IDRS) has been introduced by Finance Act, 2016, vide Chapter XI. The salient features of the scheme are as follows:
It shall be applicable to the declarations made up to the 31st day of December, 2016.
2. Who can Apply:
Any person whose appeal is pending before Commissioner (Appeals) can opt for this scheme except the following cases, when:
(a) the impugned order is in respect of search and seizure proceeding; or
(b) prosecution for any offence punishable under the Act has been instituted before the 1st day of June, 2016; or
(c) the impugned order is in respect of narcotic drugs or other prohibited goods; or
(d) impugned order is in respect of any offence punishable under the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985 or the Prevention of Corruption Act, 1988; or
(e) any detention order has been passed under the Conservation of Foreign Exchange and Prevention of Smuggling Act, 1974.
3. Process of Declaration and getting relieving order:
A person has to follow the following process to benefit from the scheme:
(1) Any person opts for the scheme shall apply in Form 1 (in duplicate) in respect of the amount payable under the Scheme on or before 31st December 2016.
Acknowledgement of declaration
(2) The designated authority shall acknowledge the declaration in Form 2 within seven days of the receipt of declaration.
(3) Copy of the declaration (Form 1) and the acknowledgement issued by the designated authority (Form 2) shall be furnished within fifteen days of the receipt of acknowledgement by the declarant to the concerned Commissioner (Appeals) before whom the appeal in respect of which the declaration has been made is pending. No form been prescribed and thus, the filing can be done under a simple letter.
(4) On the receipt of the declaration and acknowledgement, Commissioner (Appeals) shall not proceed with the appeal in respect of which the declaration has been made for a period of sixty days from the date of receipt of information (Form 1 and Form 2).
(5) The declarant shall pay tax due alongwith the interest thereon at the rate as provided in the Act and penalty equivalent to twenty-five per cent. of the penalty imposed in the impugned order, within fifteen days of the receipt of Form 2.
Intimate about payment
(6) Declarant should intimate the designated authority in Form 3 within seven days of making such payment giving the details of payment made along with the proof thereof.
Order of discharge
(7) The designated authority shall, within fifteen days of receipt of the information about the deposit made as submitted in Form 3, issue the order of discharge of dues in respect of the declaration made in Form 4.
Intimate Commissioner (Appeals)
(8) The declarant shall intimate the concerned Commissioner (Appeals) along with the copy of the order of discharge of dues issued by the designated authority before the expiry of the period of sixty days from his first intimation to Commissioner (Appeals). Since no form has been prescribed, such intimation made be made in form of simple letter.
(9) On the receipt of the information along with the copy of the order of discharge of dues issued by the designated authority, Commissioner (Appeals) shall remove the appeal from the list of pending appeals with him and intimate the declarant within seven days of the receipt of information.
4. Immunity from other proceedings under Act.
Upon the passing of an order in Form 4, the appeal pending before the Commissioner (Appeals) shall stand disposed of and the declarant shall get immunity from all proceedings under the Act, in respect of the indirect tax dispute for which the declaration has been made under this Scheme. Thereafter, no matter relating to the impugned order shall be reopened thereafter in any proceedings under the Act before any authority or court.
5. Consequences of order made under scheme.
Any amount paid in pursuance of a declaration shall not be refunded. Also, order of relief in Form 4 shall not be deemed to be an order on merits and has no binding effect in future before any authorities.
6. Frequently asked Questions
Q1. Do I have to make seeprate declarations for each appeal or can I file one declaration against all pending appeals.
You have to file separate declarations for every appeal.
Q2. I have three appeals pending before Commissioner (Appels). I want to make declaration only for one while the other two I want to contest. Can I do so?
Yes. Since the declaration is separate for each appeal, when made for one of the appeals would not have any impact on any other pending appeal.
Q3. Can I opt for the scheme for part of demand against which appeal has been filed i.e. out of three issued pending in an appeal, can I opt for one issue under this scheme and contest the balance two issues?
No. Since the declaration is single for each appeal, there is no provision of opting for part of demand pending in a single appeal.
Q4. Who can sign the declaration?
The declaration shall be verified in the manner indicated therein and shall be signed by the person making such declaration or by any person competent to act on his behalf.
Q5. Can I pay demand under this scheme from Cenvat credit?
There is no restriction in such payment as per the scheme provided. However, interest and penalty cannot be paid by Cenvat credit. However, as per intimation Form 3, there is no column for such adjustment and thus, the intent of the drafters might be payment in cash only.
Q6. Will an order of relief in Form 4 shall mean that I have got the order in appeal in my favour?
The scheme is only a dispute resolution scheme and in no manner provides any order on merit. It simply relieves an assessee from a pending appeal and all proceedings, but such order cannot be used in merit in any future matter of same or some other assessee.
Q7. Till when should I pay interest under the scheme?
Interest is to be computed and paid upto the date when tax is paid by the assessee under the scheme.
Q8. I have already deposited 7.5% as stay requirement against such appeal. Can I take the amount in computing my discharge or should I apply for refund of such amount?
Amount deposited in pending proceedings in the view of the author should be considered as payment under the present scheme.
Q9. I have deposited tax and interest but failed to pay penalty within 15 days. Can I still get immunity under the scheme?
No, if the penalty is not paid within he specified time, no relief under the scheme shall be given to the declarant.
Q9. My declcaration has been rejected for non payment. Can I adjust the amount paid towards demand upheld by Commissioner (Appeals)?
Yes, any deposit under the scheme when rejected should be considered for demand upheld by Commissioner (Appeal).