Kar Vivad Samadhan Scheme settlement barred a later departmental appeal against a dropped duty demand.

A departmental appeal against a dropped duty demand was found not maintainable where the assessee had already obtained settlement under the Kar Vivad Samadhan Scheme, 1998. The appellate authority noted that no departmental appeal was pending when the settlement certificate was issued, and the dropped amounts were not included in the tax arrears presented for settlement. It also observed that the proviso to Section 92 of the Finance Act, 1998, on which the departmental appeal was based, had been struck down and accepted by the Government. On those facts, the later review appeal could not be entertained and was rejected.

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Issues: Whether the Department's appeal against the dropped duty demand was maintainable after the assessee had obtained settlement under the Kar Vivad Samadhan Scheme, 1998.

Analysis: The appeal was filed only after the respondent had already obtained a certificate of settlement for the confirmed demand under the scheme. The appellate authority held that, at the time of settlement, no departmental appeal was pending against the amounts that had been dropped, and those amounts had not formed part of the tax arrears placed for settlement. The proviso to Section 92 of the Finance Act, 1998, which was relied upon for departmental appeals, had been struck down and accepted by the Government. In these circumstances, the later review appeal could not be entertained under the scheme.

Conclusion: The Department's appeal was held to be not maintainable and was rejected.

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