The Central Board of Direct Taxes (CBDT) has issued an essential clarification on January 20, 2025, regarding the Vivad se Vishwas Scheme, 2024, specifically about the treatment of appeals filed after July 22, 2024, for orders passed on or before that date. This directive aims to streamline dispute resolution and enhance compliance by clearly defining the status of such appeals.
Key Provisions of the Notification:
Definition of Pending Appeals:
Appeals will be considered pending as of July 22, 2024, if:
The order was passed on or before July 22, 2024.
The time to file an appeal was available on July 22, 2024.
The appeal was submitted within the permitted time without any delay condonation application.
Recognition as Appellant:
Taxpayers filing such appeals will be recognized as appellants under the Scheme.
Disputed Tax Calculation:
The computation of disputed tax will be based on the filed appeal.
Application of Scheme Provisions:
The Vivad se Vishwas Scheme and related rules will apply to these cases.
Example for Enhanced Understanding:
| Scenario | Details | Effect Under Vivad se Vishwas |
|---|---|---|
| Order Date | July 15, 2024 | Considered for the Scheme as the order precedes July 22, 2024. |
| Appeal Period Available | Until August 15, 2024 | The appeal period remained open on July 22, 2024. |
| Appeal Filing Date | August 10, 2024 | Filed within the permissible timeframe. |
| Application for Condonation of Delay | Not Applicable | No delay condonation needed; thus, the appeal is treated as pending on July 22, 2024. |
| Status Under Vivad se Vishwas Scheme | Pending Appeal as of July 22, 2024 | Eligible under the Scheme, allowing the taxpayer to settle the dispute as per the Scheme's provisions. |
Tax Effects:
Litigation Reduction: This clarification allows taxpayers to settle disputes, significantly reducing prolonged litigation.
Disputed Tax Calculation: Tax liabilities will be computed based on the appeal's disputed amount. Under the Vivad se Vishwas Scheme, taxpayers can resolve disputes by paying a specific percentage of the disputed tax, potentially saving on penalties and interest.
Compliance Benefits: Settling disputes through the Scheme enables taxpayers to avoid extended litigation and ensures compliance with tax regulations, improving their overall tax standing.
Implementation Challenges:
During the Scheme's rollout, difficulties arose regarding appeals involving:
Orders issued on or before July 22, 2024.
Open appeal periods as of July 22, 2024.
Appeals filed after July 22, 2024, but within the allowed timeframe.
No requirement for delay condonation for these appeals.
Government Response:
To address these challenges, the government, utilizing its authority under section 98 of the Finance (No. 2) Act, 2024, issued an order stating that such appeals are to be considered pending as of July 22, 2024. This ensures their inclusion under the Vivad se Vishwas Scheme.
Conclusion:
This clarification empowers taxpayers who filed timely appeals post-July 22, 2024, to benefit from the Vivad se Vishwas Scheme, provided they meet the stipulated conditions. This initiative aims to minimize litigation and provide a transparent resolution path, facilitating efficient dispute settlements.
