OM PRAKASH GUPTA Vs. UNION OF INDIA

JUDGEMENT

(1.) In the present writ petition petitioners have mainly prayed for quashing the order dated 13.8.2001 passed by respondent No. 2 and for the direction in the nature of mandamus or prohibition restraining or prohibiting from realizing the penalty of Rs. 5 lacs, each imposed upon the petitioners and for the direction in the nature of mandamus directing the respondent No. 2 to give the benefit of the waiver of penalty to the petitioners in view of the benefit of waiver having been given to the firm, M/s. Ashoka Boot Factory, Agra of which the petitioners are partners of any other direction as may be deem fit and proper in the circumstances of the case.

(2.) The brief facts of the case are that the petitioners are partners of the firm M/s. Ashoka Boot Factory, Agra engaged in the manufacturing of footwear. As a result of some investigation respondent No. 3 issued a show cause notice dated 21.6.1995 demanding the central excise duty from M/s. Ashoka Boot Factory, Agra to the extent of Rs. 40,08,312 under Rule 9(2) of the Central Excise Rules (hereinafter referred to as "Rules") read with proviso to Section 11-A of the Act and also proposed to impose penalty on the firm under Rule 9(2), 52-A, 173Q and 226 of the Rules. After considering the reply, filed by the firm including the petitioners, respondent No. 3 passed an order dated 14.1.1998 confirming the demand duty of Rs. 39,86,152 on the firm, Respondent No. 3 imposed a penalty of Rs. 15 lacs on the firm under various Rules. Respondent No. 3 also imposed penalty of Rs. 5 lacs on each of the petitioners under Rule 209-A of the Rules. Against the aforesaid order of the respondent No. 3 confirming the demand of duty and penalty, partnership firm as well as the petitioners filed separate appeals before Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (in short "CEGAT").

(3.) During the pendency of the appeals before CEGAT vide Finance (No. 2) Act, 1998, Kar Vivad Samadhan Scheme, 1998 was enacted (hereinafter referred to as "Scheme") for the settlement of tax arrears. Broadly speaking in respect of indirect taxes, this scheme provided that on payment of 60% of tax arrears, penalty, interest and criminal procedure etc. shall be waived. Partnership firm, M/s. Ashoka Boot Factory filed declaration-dated 15.10.1984 with the respondent No. 3 in terms of Section 88 of the scheme. On the above declaration, respondent No. 3 passed order dated 21.12.1998 under Section 90(1) of the scheme directing the firm to make payment of Rs. 13,91,576 toward full and final settlement of its tax arrears. It is made clear that the petitioners have not filed any separate declaration and, therefore, in the order under Section 90(1) it has been observed that the case relating to the petitioners will remain alive. Firm deposited Rs. 13,91,576 on 30.1.1999 and on such deposit respondent No. 3 issued certificate dated 18.2.1999 certifying the receipt of the payment from the firm towards full and final settlement of tax arrears and also granting immunity from prosecution and imposition of penalty in respect of matters covered in the declaration. That in the meantime, in exercise of powers conferred under Section 97(1) of the scheme respondent No. 1 issued the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 deemed to have been made effective from 1.9.1998. The order provided as follows: