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Issues: (i) Whether the discharge certificate issued under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 in favour of the main noticee extended immunity to the co-noticees; (ii) Whether Section 78A of the Finance Act, 1994 could be invoked for the period prior to its insertion and how far it applied to the disputed period; (iii) Whether the penalty imposed on the appellants required modification on account of the surrounding circumstances.
Issue (i): Whether the discharge certificate issued under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 in favour of the main noticee extended immunity to the co-noticees.
Analysis: The benefit under Section 124(1)(b) of the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 was held to be available only to the person who applied under the scheme and obtained the discharge certificate. No provision in the scheme was found that extended immunity to other co-noticees merely because the main noticee had settled the dispute.
Conclusion: The claim of immunity for the co-noticees was rejected.
Issue (ii): Whether Section 78A of the Finance Act, 1994 could be invoked for the period prior to its insertion and how far it applied to the disputed period.
Analysis: Section 78A was treated as a penal provision and, in the absence of any express retrospective operation, was held to apply prospectively from its insertion date. Since the dispute covered both pre-insertion and post-insertion periods, the provision could not be applied to confer complete relief on the appellants, though the Tribunal noticed the surrounding factual matrix while considering the final relief.
Conclusion: Section 78A was held to operate prospectively and was not unavailable for the period after its insertion.
Issue (iii): Whether the penalty imposed on the appellants required modification on account of the surrounding circumstances.
Analysis: The Tribunal took into account the family circumstances and the illness of another director, and considered that these factors justified a reduction in the quantum of penalty, while not setting aside liability altogether.
Conclusion: The penalty was reduced to Rs. 50,000 each.
Final Conclusion: The appeals succeeded only to the limited extent of reduction in penalty, while the substantive challenge to liability was not accepted in full.
Ratio Decidendi: A penal fiscal provision operates prospectively unless the statute expressly provides otherwise, and a settlement or discharge certificate obtained by one noticee under a beneficial scheme does not automatically confer immunity on co-noticees absent an express enabling provision.
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