ONKAR S KANWAR Vs. UNION OF INDIA

JUDGEMENT

(1.) ALL these original petitions were referred to the Division Bench by K. S. Radhakrishnan J., since according to the learned single judge, the question raised by the petitioners in these matters is of considerable importance which will have far reaching consequences. The petitioners in these original petitions seek a declaration that the Kar Vivad Samadhart Scheme (Removal of Difficulties) Order, 1998, is ultra vires Article 14 of the Constitution of India. In the alternative, they pray for a declaration that they are also covered by the above mentioned order notwithstanding that show-cause notices have been adjudicated upon in relation to them.

(2.) SINCE the facts are the same, we shall refer to the facts in Original Petition No. 13806 of 1999. The petitioner in that original petition is the vice-chairman and managing director of Apollo Tyres Limited. Apollo Tyres Limited is a company incorporated under the Companies Act, 1956. Respondent No. 1 is the Union of India, respondent No. 2 is the Designated Authority under the Kar Vivad Samadhan Scheme, 1998, and respondent No. 3 is the Commissioner of Central Excise. The Government of India announced the Kar Vivad Samadhan Scheme (hereinafter referred to as "the Scheme"). The scheme is contained in Section 86 to Section 98 of the Finance (No. 2) Act, 1998. The object of the scheme as stated when the Finance (No. 2) Bill, 1998, was introduced is as follows (see [1998] 231 ITR (St.) 45, 67) :

(3.) ON December 8, 1998, the first respondent issued what is called the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 (see (1999] 235 ITR (St.) 90). This order is dated December 8, 1998. It is produced as exhibit P-3 in the case. As per clause 1(2) of the order, it shall be deemed to come into force on September 1, 1998. We are concerned with clause 2 of the above order. Clause 2 of the order states that, where a declaration to the designated authority has been made in respect of tax arrear in relation to indirect tax enactment for the amount of duties (including drawback of duty, credit of duty or any amount representing duty), cesses, interest, fine or penalty which constitutes the subject-matter of a demand notice or a show-cause notice issued on or before March 31, 1998, but remaining unpaid, and pending determination on the date of making a declaration and, where, in respect of the same matter stated in the said declaration, a show-cause notice has also been issued to any other person and is pending adjudication on the date of making the declaration, then, no civil proceeding for imposition of fine, or penalty shall be proceeded with against such other person. In the explanatory memorandum of exhibit P-3, it is stated as follows : Under the Kar Vivad Samadhan Scheme, 1998, attention of the Government has been drawn to the difficulties being encountered in settlement of certain categories of cases of pending show-cause notices involving also certain co-noticees against whom penal action is proposed in the same case for the alleged involvement for the irregularities committed by the principal noticee. Having due regard to the aims and objects of the scheme, the Government have decided to issue an order for removal of difficulties. It has been, inter alia, clarified that no civil proceedings for imposition of fine or penalty shall be proceeded with against the co-noticees and in such cases the settlement in favour of the declarant under the scheme shall be deemed to be full and final in respect of other perxons also on whom show-cause notices were issued on the same matter.