Penalty on Co-Noticee not Sustainable when Main Case Settled under SVLDRS: CESTAT [Read Order]

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that penalties on co-noticees are not sustainable when the main case is settled under Sabkha Viswas ( Legacy Dispute Resolution ) Scheme, 2019 (SVLDRS-2019).

Murari Lal Agarwal,appellant-assessee,sought a penalty waiver under Rule 26. The main case was settled under SVLDRS-2019, and the tribunal treated the appeal as withdrawn on 01.04.2021.The assessee's counsel, Shri Amber Kumrawat, argued that the issue was already settled in favor of the assessee. He relied on several judgments.

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The SVLDRS-2019 was launched in 2019 to resolve pending service tax and excise duty disputes. It allowed taxpayers to settle by paying a reduced amount, with relief from interest, penalties, and prosecution. The scheme applied to unresolved cases as of June 30, 2019, and was available until December 31, 2019, helping clear pending disputes and reduce the burden on taxpayers and the government.

In response, the counsel for the Revenue, upheld the impugned order and cited the tribunal's judgment in M/s Four R Associates (2023 CESTAT Chennai).

A single member bench comprising Ramesh Nair ( Judicial Member ) reviewed the submissions and records and noted that both Single Member Bench and Division Bench judgments had established that when a main party's case was settled under SVLDRS-2019, co-noticees would not be liable for penalties under Rule 26 of the Central Excise Rules, 2002.

Read More:Co-Noticee can apply for waiver of Penalty under Sabka Vishwas Scheme 2019 If main Noticee Issued Discharge Certificate: CESTAT

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The appellate tribunal cited the Division Bench judgment in Prakash Steeladge Ltd, which confirmed that penalties on co-noticees should not continue if the main party’s case was settled under the scheme. Several other judgments were also referred to, which supported this position.

As a result, the bench concluded that penalties on co-noticees were not sustainable once the main case was settled under SVLDRS-2019. The penalty was set aside.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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