Advocate Shashi Bekal has conducted a holistic analysis of the Vivad se Vishwas scheme in the light of all recent developments. He has also provided a practical guide on how the declaration forms have to be filled and payment made. He has called upon the Government to extend the due date for payment of the tax in view of the prevailing lockdown in the Country. He has argued that the failure to extend the due date will expose the Scheme to serious legal challenge from disgruntled taxpayers
1. Introduction:
The Vivad se Vishwas (‘VSV’) Scheme was announced by Union Finance Minister Nirmala Sitharaman during her budget speech on February 1, 2020. This has been introduced as a way to reduce the pendency of litigation under the Income tax Act, 1961 (‘Act’) with a golden shake hand via a one-time-exit-window.
On March 18, 2020, The VSV Rules 2020 has been released along with various Forms and schedules. On a prima facie glance at Form 1 i.e. the declaration under the VSV Act, 2020, it appears that, the same would be available in form of a utility, and the same has been made available on the Income tax e filing portal along with a brief and Instructions.
Link to the instructions for filing the form:
2. The important dates in the life of this piece of legislation is as under:
|
Sr. No. |
Date |
Particulars |
| 1. |
January 31, 2020 |
Specified date as defined under the VSV Act, 2020 |
| 2. |
February 1, 2020 |
The Union Finance Minister Nirmala Sitharaman during her budget speech on February 1, 2020 (2020) 420 ITR 115 (st) (146)proposed to introduce a scheme at para 126 of the speech. |
| 3. |
February 5, 2020 |
|
| 4. |
February 12, 2020 |
The Cabinet approved certain amendments with a view to widen the scope of the Bill. |
| 5. |
March 4, 2020 |
Central Board of Direct Taxes (‘CBDT’) vide Circular No. 7 of 2020 provided clarifications on provisions of VSV in the form of FAQs. |
| 6. |
March 4, 2020 |
VSV Bill, 2020 passed in the Lok Sabha |
| 7. |
March 5, 2020 |
Press Release: CBDT issues FAQs on Direct Tax Vivad se Vishwas Scheme, 2020. |
| 8. |
March 13, 2020 |
VSV Bill, 2020 receives a nod from the Rajya Sabha |
| 9. |
March 17, 2020 |
VSV Bill, 2020 receives a nod from the President |
| 10. |
March 17, 2020 |
VSV Act, 2020 comes into force |
| 11. |
March 18, 2020 |
VSV Rules, 2020 are notified |
| 12. |
March 31, 2020 |
Cut-off date for beneficial payment under the VSV Act, 2020 |
| 13. |
To be notified – as per the Act. June 30, 2020* As per the Budget Speech |
Last date for payment under the VSV Act, 2020 |
3. The Direct Tax VSV Rules, 2020 contains various Forms and Schedules for making payment under the VSV Act, 2020. For the sake of convenience, the same are simplified as under:
|
Form No. / Schedule No. |
Remarks |
|
Form – 1 |
This is the Form for filing declaration. |
|
A. Schedules applicable where declaration relates to disputed tax |
|
|
Schedule I |
To be filled in case appeal of assessee is pending before CIT(A) as on 31.01.2020 or the time for filing appeal by the assessee before CIT(A) has not expired as on 31.01.2020 |
|
Schedule II |
To be filled in case assessee has filed objections with DRP against draft assessment order and DRP has not issued any directions as on 31.01.2020 or the time-limit to file objections against draft order passed by AO has not expired as on 31.01.2020 |
|
Schedule III |
To be filled in case DRP has issued directions under section 144C of the Act in response to objections filed by the assessee and Assessing Officer has not passed the order as per such directions issued by DRP as on 31.01.2020 |
|
Schedule IV |
To be filled in case appeal of assessee is pending before ITAT as on 31.01.2020 or the time for filing appeal by the assessee before ITAT has not expired as on 31.01.2020 |
|
Schedule V |
To be filled in case appeal ofDepartment is pending before ITAT as on 31.01.2020 or the time to file appeal by the department in ITAT has not expired on 31.01.2020. |
|
Schedule VI |
To be filled in case appeal or writ of assessee is pending before High Court as on 31.01.2020 or the time for filing appeal by the assessee before High Court has not expired as on 31.01.2020 |
|
Schedule VII |
To be filled in case appeal or writ of Department is pending before High Court as on 31.01.2020 or the time to file appeal by the department in HC has not expired on 31.01.2020. |
|
Schedule VIII |
To be filled in case appeal or writ or SLP of assessee is pending before Supreme Court as on 31.01.2020 or the time for filing appeal or SLP by the assessee before Supreme Court has not expired as on 31.01.2020 |
|
Schedule IX |
To be filled in case appeal or writ or SLP of Department is pending before Supreme Court as on 31.01.2020 or the time to file appeal or SLP by the department in SC has not expired on 31.01.2020. |
|
Schedule X |
To be filled in case of a revision application of assessee under section 264 is pending before PCIT/CIT as on 31.01.2020 |
|
Schedule XI |
To be filled in case arbitration or conciliation or mediation of assessee is pending as on 31.01.2020 |
|
B. Schedules applicable where declaration relates to disputed TDS/TCS |
|
|
Schedule I |
To be filled in case appeal of assessee is pending before CIT(A) as on 31.01.2020 or the time for filing appeal by the assessee before CIT(A) has not expired as on 31.01.2020 |
|
Schedule II |
To be filled in case appeal of assessee is pending before ITAT as on 31.01.2020 or the time for filing appeal by the assessee before ITAT has not expired as on 31.01.2020 |
|
Schedule III |
To be filled in case appeal of Department is pending before ITAT as on 31.01.2020 or the time to file appeal by the department in ITAT has not expired on 31.01.2020. |
|
Schedule IV |
To be filled in case appeal or writ of assessee is pending before High Court as on 31.01.2020 or the time for filing appeal by the assessee before High Court has not expired as on 31.01.2020 |
|
Schedule V |
To be filled in case appeal or writ of Department is pending before High Court as on 31.01.2020 or the time to file appeal by the department in HC has not expired on 31.01.2020. |
|
Schedule VI |
To be filled in case appeal or writ or SLP of assessee is pending before Supreme Court as on 31.01.2020 or the time for filing appeal or SLP by the assessee before Supreme Court has not expired as on 31.01.2020 |
|
Schedule VII |
To be filled in case appeal or writ or SLP of Department is pending before Supreme Court as on 31.01.2020 or the time to file appeal or SLP by the department in SC has not expired on 31.01.2020 |
|
Schedule VIII |
To be filled in case of revision application of assessee under section 264 is pending before PCIT/CIT as on 31.01.2020 |
|
Schedule IX |
To be filled in case arbitration or conciliation or mediation of assessee is pending as on 31.01.2020 |
|
C. Schedule applicable where declaration relates to disputed penalty, interest or fee only |
|
|
Schedule I |
To be filled in case appeal of assessee is pending before CIT(A) as on 31.01.2020 or the time for filing appeal by the assessee before CIT(A) has not expired as on 31.01.2020 |
|
Schedule II |
To be filled in case appeal of assessee is pending before ITAT as on 31.01.2020 or the time for filing appeal by the assessee before ITAT has not expired as on 31.01.2020 |
|
Schedule III |
To be filled in case appeal of Department is pending before ITAT as on 31.01.2020 or the time to file appeal by the department in ITAT has not expired on 31.01.2020. |
|
Schedule IV |
To be filled in case appeal or writ of assessee is pending before High Courtas on 31.01.2020 or the time for filing appeal by the assessee before High Court has not expired as on 31.01.2020 |
|
Schedule V |
To be filled in case appeal or writ of Department is pending before High Court as on 31.01.2020 or the time to file appeal by the department in HC has not expired on 31.01.2020. |
|
Schedule VI |
To be filled in case appeal or writ or SLP of assessee is pending before Supreme Court as on 31.01.2020 or the time for filing appeal or SLP by the assessee before Supreme Court has not expired as on 31.01.2020 |
|
Schedule VII |
To be filled in case appeal or writ or SLP of Department is pending before Supreme Court as on 31.01.2020 or the time to file appeal or SLP by the department in SC has not expired on 31.01.2020 |
|
Schedule VIII |
To be filled in case of revision application of assessee under section 264 is pending before PCIT/CIT as on 31.01.2020 |
|
Schedule IX |
To be filled in case arbitration or conciliation or mediation of assessee is pending as on 31.01.2020 |
|
Schedule D: In case the appellant opts not to pay tax on additions having effect of reducing loss/depreciation or MAT credit carried forward then the relevant column of the following schedule is to be filled up. |
|
|
|
|
|
Form 2 |
Undertaking under section 4 (5) of the VSV Act, 2020 |
|
Form 3 |
Form for Certificate under section 5 (1) of the VSV Act, 2020 |
|
Form 4 |
Intimation of Payment under section 5 (2) of the VSV Act, 2020. |
|
Form 5 |
Order for Full and final settlement of tax arrear under section 5 (2) read with Section 6 of the VSV Act, 2020. |
4. Procedure for making payment under VSV Act:
Some points to keep in mind
- All Forms have to be submitted online through the income tax portal.
- Separate forms have to be filled for different Assessment Years.
- Forms can be revised in case of errors
Step 1
Fill Form 1 i.e. Form for filing declaration under section 4(1) of the VSV Act, 2020 along with Form 2 i.e. Undertaking under section 4 (5) of the VSV Act, 2020 for waiving the rights with respect to the tax arrears. Both these forms are required to be uploaded via the portal.
Step 2
Within 15 days from the date of receipt of declaration, the designated authority shall issue Form 3 i.e. a Certificate under section 5 (1) of the VSV Act, 2020 determining the amount payable by the declarant as full and final settlement of the tax arrears.
Step 3
Within 30 days (as per Form 3)/ 15 days as per section 5(2) of the Act, the declarant is expected to make the payment according to the directions in the Certificate. In case of non-payment of amount payable within the said period, the declaration under Form-1 shall be treated as void and shall be deemed never to have been made.
Step 4
Pursuant to making payment, the declarant is required to file Form 4 i.e. Intimation of Payment along with the proof of withdrawal of appeal, for cases pending before the Income tax Appellate Tribunal, Hon’ble High Court or Hon’ble Supreme Court.
Step 5
Upon furnishing of Form 4 by the declarant, the designated authority is required to pass Form 5 i.e. an order for full and final statement as per section 5(2) read with section 6 of the VSV Act, 2020, certifying that the declarant has made the payment under the VSV Act, 2020. Further the Department is barred from instituting any proceeding for prosecution for any offence under the Income-tax Act, 1961 or from the imposition of penalty. Further, this declaration shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a party in appeal or writ petition or special leave petition to contend that the declarant or the income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute.
5. Issues:
5.1. Form 3 vis-à-vis Section 5(2) of VSV Act, 2020
A contradiction has been observed between Form 3 and Section 5 (2) of the VSV Act, 2020; wherein the Act provides that the payment to be made within a period of 15 days from the date of receipt of the certificate by the declarant. However, according to Form 3, the period is 30 days. It would be rational to expect a clarification so as to remove any confusion in the minds of the tax payers.
5.2. Doctrine of legitimate expectations vis-à-vis Fundamental Rights
The Burning issue at hand, is the time limit to avail full benefit under the VSV Scheme. The last date for the same being March 31, 2020 and the fact that, the Forms have been released on March 19, 2020.
On filing of the declaration, The Department is under an obligation to issue a certificate within 15 days from the date of the declaration. It is only after the directions in the certificate that a declarant can make payment towards his disputed tax amount. Given the fact that there are less than 10 working days until March 31, 2020, there would be arbitrary discrimination amongst tax payers who have already paid the demand payable, tax payers/ declarants who get their certificate before March 31, 2020 and tax payers/ declarants who don’t get their certificate before March 31, 2020 vis-à-vis the VSV Act , 2020 read with VSV Rules, 2020. This discrimination could be held violative of Fundamental Rights guaranteed to every citizen of India by the Constitution.
Doctrine of legitimate expectations dictates that that person may have a legitimate expectation of being tested in a certain way by a public body. That the actions/ discretion must be exercised in reasonably while making public policy and should not be arbitrary and violative of Article 14 of the Constitution of India.
5.3. Latin Maxims viz. Lex not cogitimpossibila and impossibilumnullaobligntoest
Further, Judicial precedents under Income tax laws viz. The Hon’ble Supreme Court in the case ofLife Insurance Corporation of India v. Commissioner of Income-tax [1996] 219 ITR 410 (SC) and the Hon’ble Bombay High Court in the case of CIT vs Cello Plast [2012] 253 CTR 246 (Bom)(HC) inter alia have always upheld principles Lex not cogitimpossibila i.e. law does not compel a man to do that which he cannot possibly perform and impossibilumnullaobligntoest i.e. law does not expect a party to do the impossible, would be applicable in this situation. Given the global pandemic situation and the paucity of time, successful implementation of the intention of the legislature & full availment of the amnesty scheme seems virtually impossible.
6. Conclusion:
The VSV, Act was enacted with a view to improve people’s faith in the Government. Given the delay in enactment VSV Act and the unfortunate Force majeure being the global pandemic situation; The last date i.e. March 31, 2020 to avail the full benefit of the VSV Act, 2020 deserves to be postponed up to May 31, 2020. This is imperative to hold the tax payer’s Vishwasin the Government and it’s policies.
Articles for reference:
1. Vivad Se Vishwas Scheme -Quick Fix version 3 Required by Mr ParasSavla and Mr Harsh Shah, Advocates
2. Amendments to the Direct Vivad Se Vishwas Bill 2020: Major improvement but minor lacuna remains by Mr Shashi Bekal, Advocate
3. Vivad Se Vishwas Scheme : Comparison with KVSS and compilation of Judgements by Ms. Neelam Jadav, Advocate
4. Tax Counsel Explains intricacies of “Vivad Se Vishwas Scheme by Mr. FirozeAndhyarujina, Senior Advocate
5. FAQ on the Direct Tax Vivad Se Vishwas Bill, 2020 By CAs Ketan Ved, Urvi Mehta & Shraddha Jain
6. “Vivad Se Vishwas” Scheme: Is It A Penalizing Or Pardoning Tax Regimen? by CA Nidhi Surana Jain
7. Analysis of The Direct Tax Vivad Se Vishwas Bill, 2020 by CA Ashish Chadha
8. The Direct tax Vivad Se Vishwas Bill , 2020 by Dharan V. Gandhi (2020) The Chamber’s Journal – Feb- P. 87
| Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org |
Need guidance on the follow;
1. In case of loss case where the assessee is not making payment of taxes and accepting reduced loss; are we supposed to only fill in schedule D or along which schedule D relevant schedule under schedule A is also required to be filled in?
2. What is the method of calculating carried forward / brought forward of losses as per the assessee and the assessing officer to fill schedule D of the Vsv Form
Throughly researched and scientifically enumerated. This is very informative. Thank you.
As per Corrigendum dated March 20, 2020, it has been clarified that payment has to be made within 15 days of issuance of certificate i.e. Form 3
In whole of the Scheme or Act and Rules it has mentioned that there is need to get certificate of payment of tax the concerned person who is underobligation and want to settle dispute can deposit dispute tax which includes surcharge and cess in quantum disput or other like interest, penalty or TDS etc on or before 31.03.2020 in accordance with the terms provided in table of section 3 if the Act. Dispute tax can be calculate personaly or it may be that computed as per assessment order or appellate order over and above as already accepted by the assessee in ITR or in any subsequent proceedings.
Further as per section 4 declaration can be filed in as may be prescribed i.e. Form 1 & Form 2 filing the true and correct partulars as per the case and in my views even it can be filed with making the payment. Further section 5 says that designated authority within 15 day from the date of receipt of declaration, by order determined the amount payable and grant a certificate of tax arrear i.e. the amount payable after such determination.
The declarant shall pay the amount within 15 days of the receipt of certificate and intimate to the authority but in that case he shall be liable to pay additional amount as provided in table under section 3.
May be during filing we can face some technical problem because it has to be filed electronically so the system and utility of the Form may create some problem such as we found during filling the Form:
Subject: two queries -VSV Form-1
1. In case of disallowance of part loss claimed in ITR, there would be loss as per assessment and also the tax payable would be NIL. In such case disputed tax also would be NIL, refer section 2(j)(A) of VSVA, 2020. In Appeal, CIT(A) deleted the disallowance of loss and Department filed appeal before ITAT.
Now the assessee wants to close the matter under VSVA and chooses no tax / no carry forward loss in Form. As per Form Schedule-V Part -A and Part-D required to be filled. Schedule V Part A asks for the following:
A. Total Income as per order against appeal filed or to be filed ?
B. Disputed Income out of A
C. Disputed Tax in relation to disputed income at B
D. Interest charges on disputed tax
E. Penalty levied on disputed tax
F. Tax arrears (C+D+E)
i. What would be amount of income in case of assessed loss?
ii. What would be the disputed income?
iii. What would be the dispute tax in case assessee chooses not to carry forward loss/depreciation/MAT?
2. In a case where disputed tax adjusted against TDS amount or amount would be NIL u/s 154 due to wrong calculation of tax. How assessee can claim the TDS or 154 claims in Form 1. Whether he can declare ZERO tax payable in relevant columns in such case.
algnsinghad@gmail.com
Regards
Well written.