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TMI Blog2002 (9) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. were clearing certain tyres on the basis that the tyres were for use on trailers. It was found that these tyres were then being fitted to light commercial vehicles, The Commissioners of Central Excise at Kerala and in Gujarat issued show-cause notices to the company as to why excise duty and penalty be not levied. In the same show-cause notice the directors/officers were also called upon to show cause as to why penalty be not imposed on them. The company and its directors/officers replied to the show-cause notice. Thereafter the Commissioners of Central Excise in Kerala and Gujarat adjudicated the show-cause notices and called upon the company to pay excise and also imposed penalty. The Commissioners of Central Excise also required each director/officer of the company to pay a sum of Rs. 2,00,000 as personal penalty. The company as well as the officers filed appeals before the Customs Excise and Gold (Control) Appellate Tribunal. While the appeals were pending the Kar Vivad Samadhan Scheme was announced. The relevant provisions of this Scheme read as follows: "87. In this Scheme, unless the context otherwise requires,-. . . (j) 'indirect tax enactment' means the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the tax arrear is payable under the indirect tax enactment (i) in a case where the tax arrear comprises fine, penalty or interest but does not include duties (including drawback of duty, credit of duty or any amount representing duty) or cesses, at the rate of fifty percent, of the amount of such fine, penalty or interest, due or payable as on the date of making a declaration under section 88 ; (ii) in any other case, at the rate of fifty percent, of the amount of duties (including drawback of duty, credit of duty or any amount representing duty) or cesses due or payable on the date of making a declaration under section 88.... 91. The designated authority shall, subject to the conditions provided in section 90, grant immunity from instituting any proceeding for prosecution for any offence under any direct tax enactment or indirect tax enactment, or from the imposition of penalty under any of such enactments, in respect of matters covered in the declaration under section 88." On December 8, 1998, the Government passed the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order. This Order reads as follows: "1. (1) This order may be called the Kar Vivad Samadhan Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Kar Vivad Samadhan Scheme they were entitled to the benefit of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order. It was claimed that as they had paid the amounts under protest they were therefore entitled to refund of the amounts paid by them. The High Court of Kerala, by the impugned order dated March 7, 2000, allowed the writ petition and directed refund of the amounts. Pursuant to the order dated March 7, 2000, the officers in Kerala got a refund. The High Court of Gujarat dismissed the writ petition. Therefore, in their case, no refund has taken place. The judgment of the High Court of Kerala is assailed by the Union of India. The judgment of the High Court of Gujarat is assailed by the directors/ officers working in Gujarat to whom relief has been refused. Mr. Ganesh pointed out that the admitted facts are (a) that show-cause notices had been issued not only to the company but also to the various directors/ officers of the company, (b) that the show-.cause notices had been adjudicated upon and on the company excise duty as well as penalty had been imposed, whereas on each of the directors/officers a penalty of Rs. 2,00,000 had been imposed, (c) that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that section 91 of the Kar Vivad Samadhan Scheme makes it clear that on payment being made and a certificate being granted, immunity is granted against prosecution for any offence and from imposition of penalty. He submitted that once the company settled under the said Scheme, there was immunity in respect of the matter for which the show-cause notice was issued. He submitted that penalty was sought to be imposed on the directors/officers for the same matter in respect of which the show-cause notice had been issued on the company. He submitted that once the company got immunity in respect of that matter, nothing survived even against the directors/officers. We are unable to accept this submission. Under the Kar Vivad Samadhan Scheme there is no adjudication on the subject matter of the demand notice or show-cause notice. There is a settlement of the "tax arrears". Even though the same show-cause notice may call upon the company and its directors/officers to show cause, there is a separate demand for "tax arrears" against the company and a separate demand for "tax arrears" against the directors/officers. Thus each entity/person would have to file a declaration separately. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perate a,; full and final settlement in respect of all other persons on whom show-cause notice was issued in respect of the same matter. Thus read as a whole the words "pending adjudication" cannot be read to exclude cases where the proceedings are still pending in appeal. Even otherwise the order has to be read along with the Kar Vivad Samadhan Scheme. Under the Kar Vivad Samadhan Scheme a party can file a declaration so long as the proceedings are pending. Thus, even though the show-cause notice may have been adjudicated upon and an appeal is pending a party could still take the benefit of the Kar Vivad Samadhan Scheme and file a declaration. The object of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order is to give benefit of a settlement by the main party (i.e., the company in this case) to all other co-noticees. This being the object a classification, restricting the benefit only to cases where the show-cause notice is pending adjudication, would be unreasonable. If read in this manner the order would be discriminatory. An interpretation which leads to discrimination must be avoided. An interpretation, as suggested by Mr. Ganesh, would also be against the object of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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