UNION OF INDIA AND ORS. versus ONKAR S. KANWAR AND ORS.

Citation: [2002] SUPP. 2 S.C.R. 675 · Decided: 27-09-2002 · Supreme Court of India · Bench: S.S.M. QUADRI, S.N. VARIAVA · Disposal: Disposed off

Judgment (excerpt)

UNION OF iNDIA AND ORS. 
A 
V. 
ONKAR S. KANWAR AND ORS. 
SEPTEMBER 27, 2002 
[SYED SHAH MOHAMMED QUADRl AND S.N. VARIAVA, JJ.] 
B 
TAX/TAXATION: 
Kar Vivad Samadhan Scheme/Kar Vivad Samadhan Scheme (Removal 
of Difficulties) Order-Ss. 91and93/0rder 2-Levy of excise duty and penalty C 
on Company and its officers-Pursuant to Scheme declarations and payment 
made by the Company and its officers-Payment by officers under protest-
Claim of refund on the basis of benefit of the Order-Held, officers do not get 
immunity u/s 91 as declaration by Company does not cover tax arrears of 
officers-But they were entitled to benefit of the Order as adjudication D 
proceedings were pending in appeal-However, uls 93 they are not entitled to 
refand even if paid under protest-Since the refands were made by High 
Court's orders, they need not repay the amounts to Revenue. 
Interpretation of Statutes-An interpretation which leads to discrimination 
must be avoided-If two views are possible then the one which is in favour of E 
the assessee must be adopted. 
Certain Officers of a Company and ~he Company were issued show 
cause notices by Central Excise authority as to why excise duty and penalty 
be not levied on them, and consequently adjudicated show-cause notices 
and called upon the company to pay excise duty and also imposed penalty. F 
The Officers were also directed to pay a sum as personal penalty. 
During pendency of the appeals before Customs Excise and Gold 
(Control) Appellate Tribunal, Kar Vivad Samadhan Scheme was 
announced. Thereafter Kar Vivad Samadhan Scheme (Removal of 
difficulties) Order was passed. Customs and Central Excise Authority by G 
its clarificatory note clarified that the Order would not apply to cases 
where show cause notices had been adjudicated but only 'where such 
notices were pending. Tax arrears were settled under the Schemes. The 
Company and the Officers filed separate declarations and paid the 
675 
H 
676 
SUPREME COURT REPORTS [2002] SUPP. 2 S.C.R. 
A amounts. However, the Officers made the payment under protest. 
Writ petitions were filed before High Court claiming refund of the 
amo4nts paid on the ground that they were entitled to the benefit of the 
Order, as the Company had settled the matter under the Scheme. High 
Court of Kerala ordered for refund on the ground that as the appeals were 
B pending, the adjudication proceedings had not terminated. H~wever, High 
Court of Gujarat dismissed similar writ petitions. 
In appeal to this Court, State contended that benefit of the order 
was not available to the officers as the same was not available where 
C proceedings were pending adjudication, but only where the show cause 
notices were pending adjudication. 
Officers contended that once the Company settled under the Scheme, 
there was immunity in respect of the matter for which show cause notice 
was issued as per section 91 of the Scheme, and that since penalty was 
D sought to be imposed on them for the same matter for which show cause 
notice was issued on the Company and the Company getting immunity, 
nothing survived even against them. 
E 
Disposing of the appeals, the Court 
HELD: I.I. Under the Kar Vivad Samadhan Scheme there is no 
adjudication on the subject matter of the demand notice or show cause 
notice. There is a settlement of the "tax arrears". Even though the same 
show cause notice may call upon the Company and its Directors/Officers 
to show cause, there is a separate demand for "tax arrears" against the 
Directors/Officers. Thus each entity/person would have to file a declaration 
F separately. The settlement is in respect of each declaration. Section 91 only 
gives immunity in respect of matters covered in the declaration. The 
matter covered in the declaration by the Company is the "tax arrears" of 
the Company. The declaration by the Company admittedly does not cover 
the tax arrears of the Directors/Officers. Thus they get no immunity under 
G Section 91 on a settlement by the Company. (683-E-Gf 
1.2. If Kar Vivad Samadhan Scheme (Removal of Difficulties) Order 
is read as a whole, it is clear that a settlement by the main declarant is to 
operate as full and final settlement in respect of all other persons on whom 
show cause notice was issued in respect of the same matter. Thus the words 
H "pending adjudication" cannot be read to exclude cases where the 
,.,,. 
! 
U.0.1. v. ONKAR S. KANWAR 
677 
proceedings are still pending in appeal. Even otherwise the order h

Excerpt shown. Read the full judgment & AI analysis in Lexace.