Sabka Vishwas classification: rectification under Section 74 is not a pending appeal, but settlement may still proceed on payment compliance.

A rectification application under Section 74 of the Finance Act, 1994 is a limited power to correct an apparent mistake and is structurally distinct from an appeal under Section 86, which requires re-examination by the appellate forum. On that basis, a pending rectification request cannot be treated as a pending appeal for classification under the Sabka Vishwas scheme, so the pending-appeal category was unavailable. The matter therefore fell within the arrears category under the relevant scheme provisions. The delay in payment made pursuant to interim protection and an extension was not treated as fatal, and settlement could proceed on payment of the balance amount with applicable interest.

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Issues: (i) Whether a rectification application under Section 74 of the Finance Act, 1994 can be treated as a pending appeal for the purpose of classification under the Sabka Vishwas scheme; (ii) whether the declarant was entitled to relief under the pending-appeal category instead of the arrears category, and the effect of the belated payment made pursuant to the interim order.

Issue (i): Whether a rectification application under Section 74 of the Finance Act, 1994 can be treated as a pending appeal for the purpose of classification under the Sabka Vishwas scheme.

Analysis: Rectification under Section 74 is a limited power exercised by the same authority to correct a mistake apparent from the record. An appeal under Section 86 is a distinct appellate remedy before the appellate forum and involves re-examination of the decision on facts and law. The two proceedings are structurally and legally different, and pendency of a rectification request cannot be equated with pendency of an appeal arising out of the notice.

Conclusion: The rectification application could not be treated as a pending appeal; the petitioner was not entitled to classification under the pending-appeal category on that basis.

Issue (ii): Whether the declarant was entitled to relief under the pending-appeal category instead of the arrears category, and the effect of the belated payment made pursuant to the interim order.

Analysis: The scheme was applied on the footing that no appeal was pending, so the matter fell within the arrears category under Section 121(c) and Section 124(1)(c)(ii) of the Finance Act, 2019 rather than Section 124(1)(a)(ii). At the same time, the Court took note of the earlier conditional interim protection and the subsequent payment made after extension of time under the amending notification, and treated the delay as not disentitling the petitioner from settlement under the scheme upon payment of the balance amount with interest.

Conclusion: Relief under the pending-appeal category was declined, but the petitioner was allowed to complete settlement of the dispute under the scheme on payment of the balance amount and applicable interest.

Final Conclusion: The writ petitions were disposed of by upholding the arrears classification while granting the petitioner a conditional opportunity to secure settlement under the Sabka Vishwas scheme on compliance with the monetary directions.

Ratio Decidendi: A rectification proceeding under Section 74 of the Finance Act, 1994 is not an appeal for the purpose of the Sabka Vishwas scheme, and classification under the pending-appeal category requires a genuine appeal to be pending as on the relevant date.

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