Effect of SVLDRS settlement on co noticee penalty liability: personal penalties set aside where main appeal settled under the scheme

Settlement of the main dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 prevents sustaining separate personal penalties imposed on co-noticees arising from the same impugned order; the Tribunal relied on earlier tribunal authority to conclude that once the principal appeal is resolved under SVLDRS the related appeals by co-noticees contesting personal penalty cannot stand, and consequently the personal penalties imposed on the two co-noticee appellants were quashed and their appeals allowed.

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Issues: Whether penalties imposed under Section 26 of the Central Excise Act, 1944 on co-noticees are sustainable where the main noticee's liability has been settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Analysis: The appeals challenge imposition of personal penalties on co-noticees arising from the same impugned order where the principal demand in respect of the main noticee was settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Tribunal relied on earlier decisions addressing identical factual and legal questions holding that once the main appeal or demand is finally settled under SVLDRS, corresponding penalties on co-noticees arising from the same order cannot be sustained. The Tribunal referred to and followed prior Division Bench and coordinate decisions applying that principle to set aside penalties on co-noticees in similar circumstances.

Conclusion: The penalties imposed on the two appellants being co-noticees in the same impugned order are not sustainable in view of the main noticee's settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019; the impugned order insofar as it levies personal penalty on the appellants is set aside and the appeals are allowed in favour of the appellants.

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