Kar Vivad Samadhan Scheme settlement bars departmental appeal where the enabling proviso to Section 92 is unconstitutional.

A departmental appeal cannot be sustained once a dispute has been settled under the Kar Vivad Samadhan Scheme, because Section 92 of the Finance Act, 1998 bars further appellate proceedings after settlement by the designated authority. The proviso to Section 92, which attempted to permit Revenue appeals in such cases, had already been held unconstitutional as it created an arbitrary distinction between assessees in the same class. In view of that constitutional defect and the departmental circular reflecting the same position, the Revenue could not rely on the proviso to maintain the appeal.

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Issues: Whether the Revenue's appeal was maintainable after the disputed demand had been settled under the Kar Vivad Samadhan Scheme, and whether the proviso to Section 92 of the Finance Act, 1998 could be relied upon to entertain such appeal.

Analysis: Once the dues had been settled by the designated authority under Section 90 of the Finance Act, 1998, the normal bar under Section 92 operated against further appellate proceedings. The proviso to Section 92, which sought to permit departmental appeals in such cases, had already been held ultra vires Article 14 of the Constitution of India because it created an artificial distinction between assessees in the same class. That constitutional defect, coupled with the accepted departmental position reflected in the circular, meant that the Revenue could not invoke the proviso to sustain the appeal.

Conclusion: The Revenue's appeal was not maintainable.

Final Conclusion: The order rejecting the departmental appeal was sustained and the Revenue's challenge failed.

Ratio Decidendi: A departmental appeal cannot be maintained against a dispute settled under the Kar Vivad Samadhan Scheme when the enabling proviso permitting such appeal is unconstitutional.

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