Adjustment of insurance proceeds against legacy tax liability allowed to close old disputes and apply surplus to GST dues.

Insurance proceeds for damaged attached stock were treated as adjustable against crystallised liability under the Sabka Vishwas (Legacy) Dispute Resolution Scheme, 2019, where the amount was sufficient to discharge the central excise dues. A refusal to permit adjustment merely because payment had to move through a separate accounting head was described as hyper-technical and inconsistent with the scheme's purpose of closing legacy disputes. The insurance company had already issued the discharge voucher before the last date, and the delay in receipt of funds was linked to the departmental refusal to allow adjustment. The surplus was directed to be applied towards central GST dues, with any remaining balance refunded to the petitioner.

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Issues: Whether the insurance compensation payable for the damaged attached stock could be adjusted against the crystallised liability under the Sabka Vishwas (Legacy) Dispute Resolution Scheme, 2019 and the balance, if any, remitted towards other tax dues.

Analysis: The liability under the scheme had already been crystallised, and the insurance proceeds were more than sufficient to clear the central excise dues. A refusal to permit adjustment merely because payment under the scheme had to be routed through a separate accounting head was held to be hyper-technical and inconsistent with the object of the scheme, which was intended to close legacy disputes and enable a fresh beginning. The delay in receipt of funds was traced to the departmental refusal to permit adjustment, and the insurance company had already issued the discharge voucher before the last date.

Conclusion: The insurance amount was directed to be received and adjusted against the crystallised liability under the scheme, and the surplus was directed to be applied towards the petitioner's central GST dues and any remaining balance refunded to the petitioner.

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