Kar Vivad Samadhan Removal of Difficulties Order: declarant settlement binds co-noticees; appeals don't bar declarations; no refunds under Section 93

The SC held that under the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, a settlement by a declarant (the company) is deemed full and final as to other co-noticees on the same matter, and an appeal pending does not preclude filing a declaration. Officers who paid amounts under the declaration, even under protest, are not entitled to refund; similarly directors/officers would not be entitled to refund under section 93. However, because a HC order had already directed refunds to certain Kerala officers, the SC declined to direct repayment to the Revenue.

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Issues Involved:
1. Applicability of the Kar Vivad Samadhan Scheme (KVSS) to directors/officers of a company.
2. Interpretation of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order.
3. Entitlement to refund of amounts paid under protest by directors/officers.

Issue-wise Detailed Analysis:

1. Applicability of the Kar Vivad Samadhan Scheme (KVSS) to Directors/Officers of a Company:

The primary issue was whether the directors/officers of a company could avail the benefits of the KVSS, specifically regarding penalties imposed on them. The respondents in the appeals were directors/officers of a company that had settled its excise duty and penalty under the KVSS. The directors/officers also filed declarations under the KVSS and paid the determined settlement amounts. They later sought refunds, claiming they were entitled to the benefits of the KVSS (Removal of Difficulties) Order.

The court noted that under the KVSS, there is no adjudication on the subject matter of the demand notice or show-cause notice, but rather a settlement of "tax arrears." Each entity/person (company and directors/officers) had to file separate declarations and settle their respective tax arrears. Section 91 of the KVSS grants immunity only in respect of matters covered in the declaration, meaning the company's settlement did not cover the directors/officers' tax arrears.

2. Interpretation of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order:

The directors/officers argued that the Removal of Difficulties Order implied that once the company settled under the KVSS, the directors/officers should also benefit from the settlement. The court examined the Order, which states that if a declaration is made in respect of tax arrears and a show-cause notice is issued to another person for the same matter, the settlement in favor of the declarant should be deemed full and final for the other person as well.

The court clarified that the Order should be read as a whole, indicating that a settlement by the main declarant (the company) should operate as a full and final settlement for all co-noticees (directors/officers) if the proceedings were still pending in appeal. The court rejected the restrictive interpretation that the benefit applied only if the show-cause notice was pending adjudication, emphasizing that such an interpretation would be unreasonable and discriminatory.

3. Entitlement to Refund of Amounts Paid Under Protest by Directors/Officers:

The final issue was whether the directors/officers were entitled to refunds of the amounts they paid under protest. Section 93 of the KVSS explicitly states that any amount paid in pursuance of a declaration made under section 88 shall not be refundable under any circumstances. The court noted that all officers had paid the amounts in pursuance of their declarations under section 88, and even if paid under protest, they were not entitled to refunds.

However, the court acknowledged that the High Court of Kerala had ordered refunds to the officers in Kerala, and since section 93 was not pointed out during those proceedings, the court did not direct the officers to repay the amounts to the Revenue.

Conclusion:

The Supreme Court upheld the judgment of the High Court of Kerala, allowing the directors/officers to benefit from the company's settlement under the KVSS. It dismissed the appeals against the Kerala judgment and allowed the appeals against the Gujarat judgment, setting aside the Gujarat High Court's decision. The court affirmed that the directors/officers were not entitled to refunds of amounts paid under the KVSS, except for those who had already received refunds pursuant to the Kerala High Court's order.

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