Sabka Vishwas Scheme relief cannot be denied for procedural non-filing where penalty-only liability is otherwise covered.

Penalty on co-noticees under Rules 26 and 27 of the Central Excise Rules, 2002 was treated as not sustainable where the main noticee had settled the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Scheme's relief for tax dues, and for penalty-only matters the full penalty amount, was read as substantive statutory benefit. The requirement to file a declaration under Section 125 and Rule 3 was treated as procedural, so the co-noticees' failure to file separate declarations did not defeat their entitlement. The penalty was therefore set aside.

---

---

Issues: Whether penalty imposed on co-noticees under Rules 26 and 27 of the Central Excise Rules, 2002 could be sustained when the main noticee had settled the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and the co-noticees had not filed separate declarations under the Scheme.

Analysis: The Scheme provided relief under Section 124 of the Finance Act, 2019 for tax dues relatable to pending show cause notices and, in cases involving only penalty or late fee, for the entire amount of penalty or late fee. The requirement of filing a declaration under Section 125 and Rule 3 was treated as a procedural step, particularly where only penalty was in issue. The filing requirement was not regarded as defeating the substantive benefit intended by the Scheme, and procedural lapses were held not to override a vested statutory relief.

Conclusion: The penalty on the co-noticees could not be sustained merely because they had not filed declarations under the Scheme. The benefit of the Scheme was held available to them, and the penalty was set aside.

Ratio Decidendi: Where statutory relief under a settlement scheme extends to penalty only, procedural non-filing of a declaration does not defeat the substantive benefit when the entitlement is otherwise clear.

---