DASARATHBHAI V PATEL Vs. UNION OF INDIA

JUDGEMENT

(1.) In all these Petitions the issue raised is regarding the interpretation of the provisions of Kar Vivad Samadhan Scheme (Removal of Difficulties) Order 1998. All the petitioners are partners/directors of various Firms engaged in the manufacture of excisable goods. Common show cause notices were issued to the manufacturers, i.e. the Firms as also the partners/directors. The show cause notices were issued prior to 31-3-1998 and quantified amounts of dues were demanded from the Firms. Notices for imposing penalty on the Firms as also the partners/directors were issued. Orders of adjudication were passed confirming demands of duty against the Firms and also penalties on the partners/directors. The partners and directors had preferred Appeals before the Appellate Authority and were pending when the Kar Vivad Samadhan Scheme (KVS Scheme) was brought into operation on 1-9-1998. The amounts of penalties were not paid and the petitioners filed declarations as individuals under the KVS Scheme by paying 50% of the penalty amount for settlement of remaining 50% of tax arrears of penalties.

(2.) On 8-12-1998, the Central Government issued Kar Vivad Samadhan Scheme (Removal of Difficulties) Order 1998 with retrospective effect from 1-9-1998, i.e. the date on which the original KVS Scheme was brought into force. Under the Removal of Difficulties Order, the benefits of the Scheme were extended along with the main noticees also to the co-noticees against whom show cause notices had been issued. It was provided that on payment of 50% of the tax arrears by the main noticees, the proceedings pending against the co-noticees should also stand settled.

(3.) The case of the petitioners in this batch of Petitioners is that the amount of penalties were imposed and were quantified. They had all preferred Appeals. The matters were not at the show cause notice stage. In a similar situation a Division Bench of this Court to which one of us, namely, D.M. Dharmadhikari, C.J. is a party, in Special Civil Application No. 4326 of 1999 and other cognate matters ( Omkar S. Kanwar V/s. Union of India ) by its judgment dated 14-11-2000 held that on correct interpretation of the order of removal of difficulties 1998, the co-noticees on whom, pursuant to the show cause notices, penalties have been imposed by an adjudication order and they are in Appeal, the benefit of KVS Scheme cannot be extended and cases against them cannot be settled merely on payment of 50% of tax arrears by the main noticees.