Sabka Vishwas Scheme relief is confined to duty arrears; unquantified interest and penalty claims need prior adjudication.

Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, "tax dues" and "amount in arrears" are limited to outstanding duty liability and do not extend to unquantified interest or penalty where no duty arrears remain. On the facts stated, the assessee had already paid the full duty, so a declaration seeking only interest and penalty was not eligible for relief under the Scheme. Separately, recovery of interest or penalty under the Central Excise regime requires prior lawful adjudication; recovery communications issued without such adjudication were premature. The customs recovery provision invoked for garnishee action was held inapplicable to Central Excise recoveries, making the recovery action invalid.

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Issues: (i) Whether declarations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 could be maintained and relief computed where the assessee had already discharged the entire duty liability and only unquantified interest and penalty were sought to be covered; (ii) Whether recovery of interest and penalty could be initiated without prior adjudication under the Central Excise Act, 1944, and whether Section 142(1)(d) of the Customs Act, 1962 could be applied to recover dues under the Central Excise Act, 1944.

Issue (i): Whether declarations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 could be maintained and relief computed where the assessee had already discharged the entire duty liability and only unquantified interest and penalty were sought to be covered.

Analysis: The Scheme defines "tax dues" with reference to "amount in arrears", and "amount in arrears" in turn refers to duty recoverable as arrears under the indirect tax enactment. The Court held that the expression "amount of duty" in the Scheme covers only Central Excise duty, Service Tax or cess, and does not include interest or penalty. On the admitted facts, the entire duty liability had already been paid before the declarations were filed, while interest and penalty had neither been adjudicated nor quantified in writing before the cut-off date. The Scheme and the cited circulars could not be read to create eligibility or relief for an unpaid, unquantified interest/penalty claim when no duty arrears survived.

Conclusion: The declarations were not maintainable to the extent they sought settlement of only unquantified interest and penalty, and no relief was admissible under the Scheme.

Issue (ii): Whether recovery of interest and penalty could be initiated without prior adjudication under the Central Excise Act, 1944, and whether Section 142(1)(d) of the Customs Act, 1962 could be applied to recover dues under the Central Excise Act, 1944.

Analysis: Rule 8(4) of the Central Excise Rules, 2002 makes Section 11 of the Central Excise Act, 1944 applicable for recovery of duty and penalty, which means recovery action for interest or penalty must first rest on adjudication. The impugned recovery communications were issued without such adjudication and were therefore premature. The Court further held that the customs recovery provision relied upon by the revenue had not been borrowed for application to Central Excise recoveries through the notification cited, and could not sustain the garnishee action.

Conclusion: The recovery communications were without jurisdiction and were set aside, with consequential refund of any amount recovered pursuant to them.

Final Conclusion: The challenge to settlement under the Scheme failed, but the recovery action for interest and penalty was held invalid for want of prior adjudication and for want of applicable statutory authority, resulting in a partial allowance of the writ petition.

Ratio Decidendi: Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, "tax dues" and "amount in arrears" are confined to outstanding duty liability and do not extend to unquantified interest or penalty where no duty arrears survive; recovery of interest or penalty under the Central Excise regime requires lawful adjudication and cannot be founded on an inapplicable customs recovery provision.

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