Gujarat H.C : The show-cause notice dt. 16th of July, 1997, was issued to the company as well as its directors demanding the duty and it was also proposed to impose penalties.

High Court Of Gujarat

Radheshyam Tilochand Agarwal Saraogi vs. Union Of India

Section KVSS 1(2)

M.R. Calla & N.G. Nandi, JJ.

Special Civil Appln. Nos. 9449 to 9453 & 9514 of 1999

14th June, 2001

Counsel Appeared

Paresh M. Dave, for the Petitioner : Mukesh R. Shah, for the Respondents

JUDGMENT

M.R. CALLA :

Mr. P.M. Dave for the petitioners, Mr. Mukesh R. Shah for the respondents. Rule. Mr. Mukesh R. Shah waives the service of Rule for the respondents. In the facts and circumstances of the case on the request of learned counsel of both the parties the matters are taken up for final hearing right today. All these 6 special civil applications are based on identical facts and involve common questions and, therefore, we propose to decide all these petitions by this common judgment and order as under.

2. The show-cause notice dt. 16th of July, 1997, was issued to the company as well as its directors demanding the duty and it was also proposed to impose penalties. The replies had been filed to this notice and the proceedings were pending till 1st Sept., 1998, when the Kar Vivad Samadhan Scheme was introduced. Under this Kar Vivad Samadhan Scheme, 1998, which came into force on 1st Sept., 1998, the declarations were to be made on or before 31st Sept., (sic-December) 1998. Under the said Scheme the company settled the matter and the settlement became final with the payment of 50 per cent of the tax as envisaged by the Scheme itself. However, the declarations made on behalf of the directors and others, i.e., co-noticees, were not accepted and the order was passed on 30th Oct., 1998, against them. Thereafter an order was passed on 30th Nov., 1998, imposing penalties on the directors and others. Later on, the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998, was issued by the Central Government on 8th Dec., 1998. It was a statutory order and under s. 1(2) of this order it was provided that it will relate back to 1st Sept., 1998, i.e., the date on which the Kar Vivad Samadhan Scheme itself had come into force. As per this statutory order it was provided that in case the dispute has been settled by the company, the proceedings will be treated to be concluded against the other directors/co-noticees in case the notice was pending as on the date of declaration.

3. In view of this statutory order, the petitioners herein made a representation on 24th Dec., 1998, that the order imposing penalties against them may not be acted upon because the company had already settled the dues and under s. 1(2) of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998, their liability had come to an end with the settlement of dues by the company as the Removal of Difficulties Order itself provided that it will be effective from 1st Sept., 1998. This order dt. 8th Dec., 1998, is reproduced as under : “Ministry of Finance Department of Revenue, New Delhi Dt. the 8th Dec., 1998. Order S.O. (E) In exercise of the powers conferred by sub-s. (1) of s. 97 of the Finance (No. 2) Act, 1998, the Central Government hereby makes the following order, namely : 1. (1) This order may be called the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998. (2) It shall be deemed to have come into force on 1st day of September, 1998. 2. Where a declaration to designated authority has been made in respect of tax arrear in relation to indirect tax enactment for the amount of duties (including drawback of duty, credit of duty or any amount representing duty), cesses, interest, fine or penalty which constitutes the subject-matter of a demand notice issued on or before the 31st day of March, 1998, by remaining unpaid and pending determination on the date of making declaration and, where in respect of the same matter stated in the declaration, a show-cause notice has also been issued to any other person and is pending adjudication on the date of making declaration, then no civil proceedings or imposition of fine or penalty shall be proceeded with against such other person and in such case the settlement in favour of the declarant under sub-s. (1) of s. 90 shall be deemed to be the full and final in respect of such other person also on whom show-cause notice was issued on the same matter covered under the declaration. Sd/- Lata Gulati Under Secretary to Government of India.”

The respondents have opposed this claim on the ground that on 8th of December, 1998, when the aforesaid Removal of Difficulties Order was issued, the orders with regard to the penalties had already been passed against the petitioners on 30th of November, 1998, after the rejection of their claim on 30th Oct., 1998.

We have considered the submissions made on behalf of both the sides. In teeth of the fact that the Removal of Difficulties Order itself has been made effective from 1st Sept., 1998, and which is clearly retroactive in nature, the submission of the respondents cannot be accepted. If such interpretation is taken, it would lead to discriminatory and unjust results. Petitioners’s claim that their liability was over with the settlement of the dues by the company itself is well-founded and the same cannot be defeated merely because the orders had been passed on 30th Oct., 1998, and 30th Nov., 1998, with regard to them. If any co-noticee’s or directors and others’ case has remained pending beyond 8th of December, 1998, he would get the benefit of Removal of Difficulties Order and merely because in certain cases the order has been passed on 30th Oct., 1998, and 30th Nov., 1998, with regard to the imposition of penalties they will not be able to get the advantage of this statutory order which itself has been effective from 1st Sept., 1998. The intention behind the Order of Removal of Difficulties and in making it retroactive from 1st Sept., 1998, clearly shows that the same was made to bring an end to all these controversies, once the dues were settled by the company. In face of the effective date, i.e., 1st Sept., 1998, of the Order of Removal of Difficulties, the orders dt. 30th Oct., 1998, and 30th Nov., 1998, have to be treated as non-existent. In this background, the representation dt. 24th Dec., 1998, made by the petitioners subsequent to the issue of Removal of Difficulties Order on 8th Dec., 1998, ought to have been accepted and the proceedings should have been treated to have been closed against them. Unfortunately that has not happened and the same has precipitated the filing of these petitions.

6. For the reasons aforesaid, all these 6 petitions deserve to be allowed. All these 6 petitions are hereby allowed and it is observed that the orders dt. 30th Oct., 1998, and 30th Nov., 1998, passed against the petitioners shall not be given effect to and acted upon against them and it will be treated as if these orders had never been passed against them and the case of the present petitioners shall also be treated as covered and settled under the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998, and the proceedings which were initiated against the petitioners under the show-cause notice dt. 16th July, 1997, shall stand terminated. Rule is made absolute accordingly. No order as to costs.

[Citation : 257 ITR 249]

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