Kar Vivad Samadhan Scheme eligibility: disputed indirect tax dues under challenge could not be rejected as outside the scheme.

For the Kar Vivad Samadhan Scheme, 1998, disputed indirect tax dues remained eligible where a demand or show cause notice had been issued and liability was under challenge. The revenue could not reject the declaration merely because it treated the arrears as final, since the petitioners had disputed the demand and an appeal was pending. The communication rejecting the declaration was therefore unsustainable, and the declaration had to be processed under the Scheme.

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Issues: Whether the petitioners' declaration under the Kar Vivad Samadhan Scheme, 1998 was maintainable and liable to be proceeded with, notwithstanding the revenue's view that the amount was not in dispute because the demand had attained finality.

Analysis: The declaration could not be rejected merely on the premise that the dues were not disputed. The Court relied on the Supreme Court decisions holding that, for the purpose of the Scheme, once a demand notice or show cause notice has been issued and the liability is disputed, the matter falls within the scheme's ambit. The petitioners had challenged the demand and an appeal was pending, so the revenue's stand that the arrears were outside the Scheme was unsustainable.

Conclusion: The declaration was maintainable and had to be considered in accordance with law; the impugned communication rejecting it was not sustainable.

Final Conclusion: The writ petition succeeded, the rejection of the declaration was set aside, and the declaration was directed to be processed under the Scheme.

Ratio Decidendi: For the Kar Vivad Samadhan Scheme, disputed indirect tax dues remain eligible where a demand or show cause notice has been issued and the liability is under challenge.

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