Settlement under a tax amnesty scheme can bar consequential penalty enforcement against co-noticees on the same underlying facts.

Settlement of the principal noticee's liability under the Kar Vivad Samadhan Scheme, 1998 was treated as extending to co-noticees where the employee-noticees' penalty arose from the same underlying customs dispute. Applying the principle in Onkar S. Kanwar, the court held that the settlement benefit could not be denied when the consequential penalty against the individuals depended on the same adjudicatory foundation as the company's settled liability. The penalty order against the three employee-petitioners was therefore quashed, and recovery from them was restrained.

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Issues: Whether settlement of the principal noticee's liability under the Kar Vivad Samadhan Scheme, 1998 barred enforcement of penalty against the employee-noticees who had been proceeded against on the same underlying allegations.

Analysis: The penalty imposed on the individual petitioners rested on the same factual foundation that led to the customs duty demand against the company. The company had already invoked and completed settlement under the scheme, and the Supreme Court's exposition in Onkar S. Kanwar was applied to hold that the object of the removal of difficulties order was to extend the benefit of settlement by the main declarant to other co-noticees in respect of the same matter. Since the present proceedings concerned penalty dependent on the same adjudicatory foundation, the respondents could not independently enforce the penalty against the employee-noticees after the principal noticee's settlement had been accepted.

Conclusion: The enforcement of penalty against the three individual petitioners was not sustainable and the penalty order, to that extent, was quashed in their favour.

Final Conclusion: The writ petition succeeded and the respondents were restrained from recovering the penalty from the employee-petitioners.

Ratio Decidendi: Where a statutory settlement scheme is accepted in favour of the principal noticee and the liability against other noticees is merely consequential to the same underlying matter, the settlement can extend to bar independent enforcement of the consequential penalty against such co-noticees.

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