2006 (7) TMI 221 - HC - Central Excise

Dismissal of Writ Petitions under Kar Vivad Samadhan Scheme due to Finality of Duty Demand

The court dismissed multiple writ petitions seeking benefits under the Kar Vivad Samadhan Scheme, 1998 (KVS) as the duty demand was not in dispute before ... Kar Vivad Samadhan Scheme Issues:Claiming benefit under Kar Vivad Samadhan Scheme, 1998 (KVS) based on pendency of appeal or reference before an Appellate Authority.Analysis:The petitioners in multiple writ petitions sought the benefit of the Kar Vivad Samadhan Scheme, 1998 (KVS) under Section 88, arguing entitlement based on Section 95 of the Scheme. The Senior Central Government Standing Counsel contended that the duty demand must be a subject matter before the High Court or an Appellate Forum for eligibility. It was alleged that one of the writ petitions was filed artificially to create an impression of pending proceedings, solely to benefit from the scheme.The court examined the timeline of events, noting the confirmation of duty demand and penalties imposed, subsequent appeals, and the final dismissal by the Supreme Court. The Designated Authority concluded that the duty demand was not in dispute before any Appellate Forum, as clarified by the Ministry of Finance. The court emphasized that the subject matter of tax arrears was not in dispute, as all previous legal avenues had been exhausted, and the duty demand had been confirmed.Citing precedents from other High Courts, the court highlighted that the KVS is not applicable when appeals have been finally decided, and only rectification applications are pending. Emphasizing the objective of the KVS to incentivize honest taxpayers and unlock revenue from pending litigations, the court stated that creating artificial pendency post-finality for scheme benefits is impermissible and defeats the scheme's purpose.In the present case, the court found that the matter had reached finality with the Supreme Court's confirmation of duty demand. The petitioners' attempt to create artificial pendency through the writ petition was deemed impermissible. The court dismissed the writ petition, emphasizing that the discretionary jurisdiction under Article 226 requires full disclosure of details, which was lacking in this case.Regarding another writ petition by the same petitioners, relying on the dismissed petition for KVS benefits, the court upheld the rejection of scheme benefits due to the absence of the original demand being a subject matter of dispute in any appellate forum. Consequently, this second writ petition was also dismissed.The court clarified that no costs were imposed, and any amounts paid by the petitioners based on court directions would be considered while recovering the outstanding dues from them.