Legacy dispute resolution relief cannot include penalty deposits, but bona fide failed payment under the Scheme may still be protected.

An amount deposited pursuant to appellate tribunal directions was held not to count as tax dues for computing relief under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019, because it had been paid towards penalty rather than tax. On that basis, the balance amount payable under Clause 124 was correctly determined by the respondents. However, where the petitioners made a bona fide attempt to remit the determined sum within the extended Scheme period and the payment failed for a technical reason beyond their control, the substantive benefit of the Scheme could not be denied on procedural grounds. The petitioners were therefore entitled to avail the Scheme on payment of the determined amount with interest.

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Issues: Whether the amount of Rs. 5,00,000/- deposited pursuant to the appellate tribunal's direction could be excluded from the tax dues under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019, and whether the petitioners were entitled to relief when the payment attempt under the Scheme failed due to expiry of the CPIN.

Analysis: The amount of Rs. 5,00,000/- was paid towards penalty and not towards tax dues, and therefore it could not be added to the pre-deposit or deposit amount deductible for computing relief under Clause 124 of the Scheme. On that basis, the respondents were justified in determining the balance amount payable under the Scheme. At the same time, the petitioners made a bona fide attempt to remit the determined amount within the extended time under the Scheme, but the transaction failed for a technical reason beyond their control. The object of the Scheme was to settle legacy disputes and reduce litigation, and the substantive benefit could not be denied merely on procedural grounds when the petitioners had shown readiness to comply.

Conclusion: The petitioners were not entitled to treat the penalty deposit as tax dues, but they were entitled to the benefit of the Scheme on payment of the determined amount with interest, and the writ petition succeeded to that limited extent.

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