DoP proposal: One time settlement for overcharging disputes

It has proposed a draft framework of SOTS on the lines of Vivad se Vishwas schemes for settlement of disputed income tax dues.

Govt DoP

Last Updated on February 2, 2021 by The Health Master

The Department of Pharmaceuticals (DoP) has proposed draft framework of Special One-Time Settlement (SOTS) scheme to pharma companies for fast track recovery of liabilities relating to overcharging cases under Drugs Price Control Order (DPCO) 1979, 1987, 1995, 2013 in exercise of the powers conferred by the DPCO-2013 read with section 3 of the Essential Commodities (EC) Act, 1955, (10 of 1955).

SOTS-2021 shall be notified and introduced with effect from March 1, 2021 and shall close on June 30, 2021. The SOTS, 2021 shall cover all active court cases in any Court of Law in the country, as on specified date, relating to overcharging under the provisions of DPCO 1979, 1987, 1995 and 2013.

The DoP proposes to bring the SOTS during the current financial year for the settlement of overcharging cases which are pending in various courts to provide a comprehensive platform for out of court resolution of disputes, promote ease of doing business in the consumer and industry interest.

It has proposed a draft framework of SOTS on the lines of Vivad se Vishwas schemes for settlement of disputed income tax dues.

The quantum of settlement offered under the draft SOTS is as follows – where the “Disputed Amount” includes Principal and/or Interest and/or penalty, amount payable by March 31, 2021 is disputed principal amount only  and amount payable after March 31, 2021 would be disputed principal amount only + 10% of disputed principal amount.

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Where the “Disputed Amount” includes interest and/or penalty only, amount payable by March 31, 2021 is twenty five percent (25%) of disputed amount and amount payable after March 31, 2021 would be thirty per cent (30%) of disputed amount.

The applicant availing the benefit under the Scheme shall submit an undertaking in the prescribed format provided in the notified Scheme, regarding withdrawal of the legal case(s) and not to avail any legal remedy in future in respect of the such case(s) for which benefit is availed under SOTS.

Such undertaking should be furnished before making any payment under the Scheme and would be legally binding on the applicant.

The applicant availing the benefit under the Scheme shall withdraw the legal case and submit the appropriate proof of such withdrawal to National Pharmaceutical Pricing Authority (NPPA) in due course of time, as early as possible, for closure of case filed by NPPA.

Already closed overcharging cases cannot be considered again in any circumstances under SOTS and are out of the purview of the Scheme. Further, no request for review or reopening of any case closed under the Scheme shall be entertained by NPPA.

There shall be no refund of any amount under the scheme. A clause for this purpose shall be included in the undertaking to be furnished by the applicant.

The payment due as per scheme shall be made online by the applicant in the manner prescribed in the notified Scheme. The applicant shall provide the proof of payment to NPPA for verification of the payment. Detailed procedure shall be described in the notified Scheme.

SOTS offers resolution based on demand currently sub-judice on ás is where is basis’. No revision in the disputed amount based on new/pending request will be applicable.

Any earlier payment or part payment made by the applicant, before submission of application under the scheme, in respect of case(s) under SOTS, shall be adjusted from the amount to be paid under SOTS, and balance amount, if any, shall be payable by the applicant.

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In case applicants made part payments on or before March 31, 2021 under the scheme but couldn’t discharge the whole overcharge amount or interest as the case may be, then such applicants will be considered only for ‘quantum of relief available after March 31, 2021. However, in case part payment is made and balance payment is not made by June 30, 2021, then the case would be dealt under the extant provisions of DPCO and applicant would not be entitled to any benefit under SOTS.

The scheme will be applicable only in respect to disputed amount currently under litigation. It does not preclude raising subsequent demand based on extant provisions. The settlement under SOTS shall not decide any judicial issue. It only provides for a dispute resolution mechanism in respect of disputed amount only involved in the litigation case.

It shall not be lawful for NPPA or the applicant to contend in any appeal/WP/SLP that the other party (NPPA or applicant) has agreed to the decision of the disputed issue by settling the issue under SOTS.

Only the disputed amount given in the undertaking will be settled without any prejudice to the issue pending in same or other cases.

The list of court cases up to the specified date, under SOTS being offered for dispute resolution will be available on NPPA website. The scheme will be implemented on-line, including payments made.

The DoP, being administrative department of NPPA, shall finalize the scheme and operational mechanism for implementation of the scheme will be finalized by NPPA.

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