Co-noticee penalty does not survive once the principal noticee settles under the Sabka Vishwas Scheme.

Where the principal noticee has obtained a discharge certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 in full and final settlement of the tax dues, penalty proceedings against a co-noticee for the same matter do not survive. The Tribunal applied its earlier view that continuing a penalty claim against an accountant who was only a co-noticee would defeat the object of the Scheme. The penalty was therefore set aside and the appeal was allowed.

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Issues: Whether penalty imposed on a co-noticee survives after the main noticee settles the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Analysis: The main noticee had already obtained a discharge certificate under the Scheme in full and final settlement of the tax dues. In such circumstances, the continued insistence on penalty from the accountant, who was only a co-noticee, would frustrate the object of the Scheme. The Tribunal followed its earlier view that once the principal dispute is settled under the Scheme, the corresponding penalty demand against the co-noticee does not survive.

Conclusion: The penalty imposed on the co-noticee was set aside and the appeal was allowed.

Ratio Decidendi: Where the principal noticee has settled the dispute and obtained discharge under the Scheme, penalty proceedings against a co-noticee for the same matter do not survive.

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