Redemption fine treated as penalty under the legacy dispute scheme; discharge certificate cannot be withheld for non-payment.

Redemption fine payable in lieu of confiscation was treated as falling within the expression "penalty" in section 129 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, because confiscation operates as a penalty in rem and the Scheme contained no express exclusion of such fine. The Court held that the Designated Committee could not insist on payment of redemption fine as an additional pre-condition for issuing the Discharge Certificate. Reliance on departmental flyers and estoppel was rejected, and the Board's communication dated 20.12.2019 was noted as consistent with this interpretation. The settlement amount under the Scheme was therefore sufficient for closure of the dispute.

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Issues: Whether redemption fine imposed under the Central Excise Act, 1944 falls within the expression "penalty" in section 129 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and whether the Designated Committee could insist on its payment before issuing the Discharge Certificate.

Analysis: The Scheme is a reformative measure intended to settle legacy indirect tax disputes on payment of the specified amount of tax dues. The Court held that the consequences of a Discharge Certificate under section 129 are limited by the Scheme itself, but the expression "penalty" in that provision is wide enough to cover not only personal penalties but also confiscatory consequences. Redemption fine under section 34 of the Central Excise Act, 1944 is a fine in lieu of confiscation, and confiscation is a penalty in rem directed against the goods. In the absence of any express exclusion of redemption fine from the Scheme, and having regard to the text of sections 121 and 129, redemption fine could not be insisted upon as an additional condition for settlement. The Board's communication dated 20.12.2019 was consistent with this view, while the contrary reliance on departmental flyers and the plea of estoppel were rejected. The dismissal of the special leave petition against the Gujarat decision did not make that order binding as a declaration of law.

Conclusion: Redemption fine is covered by the expression "penalty" in section 129 of the Scheme, and the petitioner was entitled to the Discharge Certificate without paying the redemption fine.

Final Conclusion: The demand for payment of redemption fine as a pre-condition for settlement under the Scheme was set aside, and the authority was directed to issue the Discharge Certificate.

Ratio Decidendi: In a settlement scheme intended to close legacy indirect tax disputes, redemption fine payable in lieu of confiscation is a species of penalty and, absent an express statutory exclusion, cannot be demanded in addition to the amount payable under the Scheme for issuance of the discharge certificate.

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