Imposition of personal penalty on co-noticees after SVLDRS settlement: penalties held unsustainable and set aside.

Settlement of a primary tax demand under the Sabka Vishwas (Legacy Dispute Resolution) Scheme by the main noticee negates sustainment of personal penalties imposed on co-noticees arising from the same impugned order; the tribunal applied earlier precedents holding that once the main appeal is resolved under SVLDRS the appeals by co-noticees against personal penalties cannot be maintained, and therefore the penalties on the co-noticees were set aside and their appeals allowed. The reasoning follows prior tribunal decisions adopting the same principle and treats the imposition of personal penalties in such circumstances as unsustainable.

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

Analysis: The Tribunal considered prior orders holding that a settlement of the main appeal under SVLDRS, 2019 removes the foundation for personal penalties imposed on co-noticees arising from the same impugned order. The Tribunal relied on its earlier decisions and analogous authorities applying the effect of SVLDRS settlement to connected proceedings, concluding that once the main noticee's liability is resolved under the scheme, subsequent personal penalty claims against co-noticees arising from the same adjudication lack sustainment.

Conclusion: The penalties imposed under Section 26 of the Central Excise Act, 1944 on the three co-noticee appellants are not sustainable in view of the main noticee's settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019; the impugned order is set aside and the appeals are allowed.

Ratio Decidendi: A settlement of the principal liability under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 extinguishes the basis for related personal penalties on co-noticees arising from the same adjudication, and such co-noticee appeals against personal penalty cannot be sustained.

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