Written in : November 1998

You have found out that you are eligible to take benefit of the Kar Vivad Samadhan Scheme and have decided to go under it. How should you do it? Let us discuss the procedures in KVSS today.

You are required to make a declaration for each year you wish to go under the Scheme. This declaration is not a declaration similar to the one under VDIS of last year. It does not require you to declare any new income. It simply has you declare that you wish to settle the outstanding disputes pending in your tax matters and settle the issues.

The declaration is to be made before a Commissioner of Income Tax who has jurisdiction over your case.

We saw that the Scheme covers issues year-wise. That is, a year is a unit for settlement of dispute. As such, you may choose to make a declaration under the Scheme for one or more years. However, as we saw earlier, you cannot make a declaration for a part of the year, ie, for one or more disputes out of several for any year. You settle the case once for all or you don't.

You are not bound to make one declaration for all years. You may also make separate declaration for each year - very much unlike VDIS. This flexibility allows you to make one declaration at a time as and when you decide and are ready for the settlement, of course, before December 31.

The declaration is required to be made in Form 1A for direct tax matters and Form 1B for indirect tax matters.

The declaration should be filed in duplicate, fully filled in, with the Commissioner before December 31, 1998.

Once you file a declaration, the process starts in the department. Within 60 days of your filing, the Commissioner is to pass an order determining the amount payable by you and shall issue a preliminary certificate which shall set forth the particulars of tax arrears and the sum payable by you on settlement.

Remember that the Commissioner is required to pass the order within 60 days. Thus, he can pass the order any time before that, even a few days after your filing it.

The Commissioner may reject the declaration and treat it as never filed if he finds a material falsity in the declaration. You should, therefore, ensure very meticulous filling of the declaration.

Once the Commissioner issues a certificate determining the amount payable, it is your turn to act. Within 30 days of the Commissioner passing the order, you are required to make payment of the taxes determined as payable by you and inform him of the same.

Oddly, the law requires you to pay taxes within 30 days of the Commissioner passing the order, not its service on you. You should, therefore, keep in touch and see that there does not remain any gap, or a long gap, between the date of the Commissioner passing the order and its receipt by you. The clock starts ticking when he signs the order. However, I expect the Commissioner will date the order very close to the date you pick it up or it is served on you and will give you enough time to pay the taxes in time.

Under VDIS, there was confusion about the meaning of a month given for payment of taxes. Several declarants found to their misfortune that a month was interpreted by the department differently than their own interpretation.

Another issue that VDIS declarants found themselves to be at variance with the department was whether payment can be said to have been made on the date a cheque was presented to the bank for payment or its encashment by the bank. The department has taken a stand that it is the date the cheque was encashed that should be considered relevant and not the date of its presentation.

This recent experience should be remembered when you work under KVSS. Make payment so that the department receives credit within 30 days of the passing of the order.

Taking the fact that the Commissioner may take upto 60 days to pass an order and you get another 30 days to make payment after that, you get upto 90 days to make payment from the date of declaration.

However, you should remember that this time can be shorter if the Commissioner passes the order sooner than 60 days.

Many taxpayers are, therefore, delaying filing declarations till late December to get the maximum time to collect money and make payment of taxes.

Once you pay taxes, you are also required to file applications before the High Court or Supreme Court if your writ petitions, appeals or references are pending there.

However, your appeals before the Commissioner(Appeals) and the Tribunal automatically get withdrawn.

Once you pay the taxes, the Commissioner will issue a final certificate to you settling finally all the tax arrears. This is the important certificate which gives you the immunities and benefits under the Scheme.

The Scheme allows you (without saying so) to back out at any stage before paying the taxes. You make a declaration and the Commissioner passes an order determining the amount of taxes payable. You don't make payment and the declaration lapses. There are no adverse consequences.

If you have made several declarations for several years, you will then have the option to pay the taxes for one year ore more and not for other years.