Fiscal classification under Article 14 upheld for excluding prosecuted persons from tax settlement scheme benefits.

Section 95 of the Kar Vivad Samadhan Scheme, 1998, excluding persons prosecuted for specified socio-economic offences and related proceedings from settlement benefits, was upheld as a valid fiscal classification under Article 14. The exclusion was held to bear an intelligible differentia and a rational nexus with the scheme's object of settling pending tax disputes, expediting revenue collection, and extending immunity only to eligible declarants. The fact that the scheme could have been drafted more broadly, or that some cases may appear under-inclusive, was not enough to show arbitrariness or hostile discrimination. Contentions based on complaints, minor offences, and civil-liability proceedings did not displace the presumption of constitutionality.

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Issues: Whether Section 95 of the Kar Vivad Samadhan Scheme, 1998, excluding persons prosecuted for the specified offences and related proceedings from the scheme's benefit, is unconstitutional for violating Article 14 of the Constitution of India.

Analysis: The challenge was tested on the settled principles that a fiscal or economic classification is valid if it rests on an intelligible differentia having a rational nexus with the legislative object, and that legislation enjoys a presumption of constitutionality. The scheme was intended to settle pending tax disputes, realise revenue expeditiously, and provide immunity only to eligible declarants. The exclusion of persons facing prosecution for the specified socio-economic offences, and related proceedings, was found to be a policy choice connected to the object of the scheme. The fact that the classification could have been framed differently, or that some cases may appear under-inclusive, did not make it arbitrary. The petitioner's further contentions regarding complaints, minor offences, and civil-liability proceedings did not establish hostile discrimination or absence of nexus.

Conclusion: Section 95 of the Kar Vivad Samadhan Scheme, 1998, is not unconstitutional and does not offend Article 14 of the Constitution of India.

Ratio Decidendi: In economic and fiscal legislation, a classification will withstand Article 14 scrutiny if it is founded on an intelligible differentia bearing a rational relation to the scheme's object, and mere under-inclusion or scope for a better classification is not a ground to strike it down.

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