Refund restriction under the Vivad se Vishwas Scheme upheld as a rational fiscal classification, defeating Article 14 challenge.

Sections 124(2) and 130(2) of the Finance Act, 2019, in the Vivad se Vishwas Scheme, were upheld against an Article 14 challenge because the denial of refund for excess amounts already paid formed part of the scheme's legislative design for settling legacy indirect tax disputes. The Court treated the scheme as a one-time dispute resolution mechanism, not an amnesty or fresh levy, and held that taxation classifications are tested with greater latitude. The distinction between declarants who paid only the required pre-deposit and those who paid more was found to have a rational nexus with the object of resolving pending disputes, so the hostile discrimination challenge failed.

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Issues: Whether Sections 124(2) and 130(2) of the Finance Act, 2019, in so far as they deny refund of excess amounts already paid under the Vivad se Vishwas Scheme, are violative of Article 14 of the Constitution of India on the ground of hostile discrimination.

Analysis: The scheme was held to be a one-time mechanism intended to settle legacy disputes arising under indirect tax laws and not to grant an amnesty or create a levy. The restriction that excess pre-deposit or other deposit shall not be refunded was treated as an integral part of the legislative design. In taxation matters, the legislature enjoys wide latitude in classification, and the vice of discrimination is tested with lesser rigour. The Court found that the distinction between declarants who had paid only the pre-deposit and those who had paid more than that amount had a rational nexus with the object of resolving pending disputes and was not arbitrary. The challenge based on hostile discrimination was found misconceived.

Conclusion: The impugned provisions were held not to be unconstitutional and the challenge under Article 14 failed.

Final Conclusion: The writ petition was rejected, and the scheme provisions were upheld as constitutionally valid in their application to the petitioner.

Ratio Decidendi: In a fiscal settlement scheme, a legislative classification that limits refund of excess amounts already paid will not offend Article 14 if it is rationally connected to the object of dispute resolution and does not single out a class for hostile treatment.

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