Kar Vivad Samadhan Scheme immunity extended to directors, making penalty proceedings against co-noticees unsustainable.

Settlement by the principal noticee company under the Kar Vivad Samadhan Scheme was treated as extending immunity to co-noticees, including directors, where the directors were proceeded against only in that capacity. On that footing, continuation of penalty proceedings against the directors was held unsustainable after the company had already obtained settlement benefit. The penalty on the directors was therefore correctly dropped, and the Revenue's challenge failed.

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Issues: Whether penalty proceedings against the directors could be continued after the principal noticee company settled the dispute under the Kar Vivad Samadhan Scheme.

Analysis: The settlement of the dispute by the principal noticee under the Kar Vivad Samadhan Scheme was treated as extending immunity to other co-noticees. As the respondents were only directors of the company and the company had already availed of the scheme, the penalty proceedings against them were not sustainable.

Conclusion: The penalty imposed on the directors was correctly dropped, and the Revenue's appeals failed.

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