TaxTMI 
TaxTMI 
Guidelines in respect of the Dispute Resolution Scheme, 2008-reg.
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....n-recovery of penalty or interest. However, cases involving non-payment of service tax after having collected the same from client/customer are not included in the Scheme. 2. Salient feature of the Scheme: The salient features of this Scheme are as follows: (i) The Scheme covers all such cases where tax arrears, including interest and penalty, were payable or leviable under the Finance Act, 1994, but not paid prior to 1.3.2008 and where a Show Cause Notice/order has been issued on or before 1.3.2008. (ii) This Scheme would be in operation from 1.7.2008 to 30.9.2008. The benefit, concession or immunity under the Scheme would only be available in respect of the case in respect of which declaration is made under the Scheme within this period; (iii) The Scheme shall not apply to (a) any show cause notice or order issued under section 73A of the Finance Act, 1994, i.e., cases involving non-payment of service tax after having collected the same from client/customer; and (b) any case where tax arrears includes service tax amount of more than Rs 25,000; (iv) The order passed under the Scheme would be conclusive and would not be subjected to any appeal. A....
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....information regarding payment of sum determined by the designated authority and evidence of withdrawal of case pending in the matter, if any, before a High Court or the Supreme Court, the designated authority shall issue a certificate in Form 2 (as prescribed under rule 5 of the aforesaid Rules), certifying full and final settlement of tax arrears in the case in respect of which declarant had opted for this Scheme. 4. Compounding amount: The compounding amount under the Scheme is as follows: (i) In a case where a pending SCN involves a service tax amount upto Rs 25000/-, with penalty or interest relating there to, amnesty under the Scheme would be available on payment of an amount equal to 50% of the service tax amount involved in the SCN. The penalty and interest would stand waived. (ii) Similarly, in the case of a confirmed demand, where service tax arrears amount as on 1.3.2008 is upto Rs 25,000, with unpaid interest or penalty relating there to, amnesty under the Scheme would be available on payment of an amount equal to 50% of the service tax arrears. The penalty and interest would stand waived. (iii)&....
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.... The tax arrears as per section 94(b) of the Finance Act, 1994: (i) Service tax: Nil (ii) Education cess: Nil (iii) Interest: as applicable (as mentioned in the show cause notice)= say Rs 5000 (iv) Penalty: not decided. However, for the purposes of this Scheme, the maximum penalty that is leviable as per the show cause notice will be taken as tax arrear subject to the condition that in case the penalty leviable exceeds the service tax amount involved, the maximum penalty leviable shall be taken as equal to service tax. Therefore, (a) suppose the maximum penalty leviable is twice the service tax amount i.e., Rs 40,000. The penalty amount shall be taken as Rs 20,000. The compounding amount shall be @ 25% of Interest +25% of penalty = 0.25X5000 + 0.25X 20000 =1250+5000=Rs 6,250. (b) Suppose the maximum penalty leviable is Rs 5000 ( which is less than the service tax amou....
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....ion under the Scheme: The tax arrears as per section 94 (b) of the Finance Act, 1994: (i) Service tax: Nil (ii) Education cess: Nil (iii) Interest =Rs 10,000 (iv) Penalty: Rs 25,000 (Note: as the penalty imposed is more than the service tax amount involved in the case, the penalty amount shall be taken as equal to the service tax amount) The compounding amount shall be @ 25% of Interest +25% of penalty = 0.25X10,000 + 0.25X 25000 =2500+6250= Rs 8750 Illustration 6: The order only involves only a demand of interest of say Rs 100,000; and (iii) penalties of Rs 50,000. Service tax and cesses have already been paid. The tax arrears as per section 94 (b) of the Finance Act, 1994: (i) Service tax: Nil (ii) Education cess: Nil (iii) Interest =Rs 100,000 (iv) Penalty: Rs 50,000 The compounding amount shall be @ 25% of Interest +25% of penalty = 0.25X100,000 + 0.25X 50000 =Rs 25,000+Rs 12,500=Rs 37,500 5. As stated above, the Dispute Resolution Scheme Rules, 2008 have been issued vide notification No. 28/2008-ST, dated 4.6.2008. 6. The Commissioner of Central Excise and Service shall notify well in ....