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India wants to end Rs 2 lakh crore worth of legacy tax disputes with a new commission

India wants to end Rs 2 lakh crore worth of legacy tax disputes with a new commission

India wants to end Rs 2 lakh crore worth of legacy tax disputes with a new commission
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By Timsy Jaipuria  Oct 12, 2022 10:15:12 PM IST (Updated)

According to senior government sources, the Central Board of Indirect taxes and customs (CBIC) has appointed four members to the Customs, Central Excise & Service Tax Settlement Commission.

In yet another move to end the legacy indirect tax disputes and unlock a substantial amount of dues stuck at various courts under litigation, the government has decided to provide a forum for defaulters to come clean and pay taxes.

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According to senior government sources, the Central Board of Indirect taxes and customs (CBIC) has appointed four members to the Customs, Central Excise & Service Tax Settlement Commission.
“The commission is now empowered under law to waive fines and penalty and recover taxes with interest,” the sources added.
These special benches are now at Delhi, Mumbai, Chennai and Kolkata, and will start functioning on the legacy dispute matters very soon, sources said.
Under India’s indirect tax regime, over 16,000 show cause notices are pending with the Central Excise & Customs Duty, involving Rs 63,000 crore. There are nearly 2 lakh show cause notices pending as well for legacy service tax, involving Rs 1.14 lakh crore.
Experts said this provides the government's clear vision to end tax disputes and gives a much-needed platform to the industry and taxpayers to get their tax dispute settlements done
"This step by the government indicates that the intent is to bring down the tax disputes. The industry should critically evaluate their pending indirect tax litigations and use this as an opportunity to settle the old disputes," said Saurabh Agarwal, Tax Partner, EY.
Abhishek Jain, Tax Partner, KPMG, said: “Quick dispute resolution is a hallmark for ease of doing business in any country. With multiple SCN and disputes pending, it is a welcome move. Further, with disputed amount running in multiple crores and cashflow blocked on account of pre-deposits, easy resolution mechanism entails a win-win situation for both Government and the businesses.”
"For this to be more effective, perhaps a power of interest waiver can also be considered, subject to safeguards as in many cases the amount of interest could be more than the tax demand.  Separately, it may be a good idea to explore a one time dispute settlement scheme under GST as well as it has now completed five years and industry took time to settle into the new regime," said Pratik Jain, Partner, Pricewaterhouse & Co LLP.
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