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TMI BlogGuidelines in respect of the Dispute Resolution Scheme, 2008-reg.X X X X Extracts X X X X X X X X Extracts X X X X ..... as been notified vide Chapter VI of the Finance Act, 1994. This compounding scheme has been notified as a one time measure for quick resolution of disputes. (a) involving small service tax amounts upto Rs 25000; and (b) involving non-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) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operating the Scheme, which is as follows: (1) The Commissioner of Central Excise shall, for the purposes of this Scheme notify, by way of an officer order, an officer not below the rank of Assistant Commissioner of Central Excise as the designated officer. (2) The declarant, opting for the Scheme, shall make a declaration before the designated officer in Form 1 (as prescribed under rule 3 of the aforesaid Rules). (3) The designated officer shall get the declaration verified. Upon verification of declaration, the designated officer shall, within fifteen days, issue an order (as prescribed under section 96 (1) of Chapter VI of the Finance Act, 2008), indicating the amount to be paid by the declarant for resolution of dispute under the Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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) In a case where an SCN is pending only for imposition of both, penalty and interest, amnesty under the Scheme would be available on payment of 25 % of the interest payable plus 25% of the 'maximum' prescribed penalty leviable. If maximum penalty leviable exceeds the service tax amount, the penalty amount would be taken as equal to service tax amount for computa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10,000 plus education cess on Rs 10,000. Penalty and interest shall be waived off. Illustration 2: The assessee has already paid the service tax amount of Rs 20,000 along with education cess. However, a show cause notice has been issued demanding (i) interest at the applicable rate; and (ii) penalty as applicable under various sections of the Finance Act, 1994. 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has paid the service tax amount of Rs 25,000 along with education cess. However, (i) interest at the applicable rate; and (ii) penalties have not 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: as applicable (as mentioned in the show cause notice)= say Rs 5000 (iv) Penalty: Rs 10000. The compounding amount shall be @ 25% of Interest +25% of penalty = 0.25X5000 + 0.25X 10000 =1250 +2500=Rs 3,750. Illustration 5: The assessee has paid the service tax of Rs 25,000 along with education cess. However, interest and penalties as imposed by an order has not been paid. As per the order interest liability is Rs 10,000 and the penalties impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by quick resolution of pending disputes which fall within the specified Wide publicity may be given, in the form of trade notices, advertisements, seminars and interaction with the trade associations to make the stakeholders aware of the Scheme. Any difficulty faced in implementing the above provisions may be immediately brought to the notice of the undersigned. 8. Receipt of the Circular may be acknowledged. 9. Hindi version will follow. Yours faithfully, (Gautam Bhattacharya) Commissioner (ST) Encl: As above Annexure (Circular No. 102/5/2008-ST) ORDER ISSUED UNDER SECTION 96(1) OF THE FINANCE ACT, 2008, IN RESPECT OF THE DISPUTE RESOLUTION SCHEME, 2008 Whereas Mr./Mrs./M/s. ................................................ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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