IMPORTANT POINT
If benefit is sought under a Scheme like Kar Vivad Samadhan Scheme, party must fully comply with provisions of the scheme.

ORDER

Heard parties.

2. This appeal is against a judgment dated 13.1.2000. The question before the Court is whether the respondents are entitled to the benefit of Kar Vivad Samadhan Scheme, 1998 (in short "KVSS").

3. Briefly stated the facts are that the respondents were clearing physicians samples. Between the Department and the respondents there was a dispute on the question how the value of the samples were to be worked out. A letter dated 26-7-1995 was issued by the Superintendent, Central Excise calling upon the respondents to calculate the value in a particular manner and to file a revised price declarations accordingly. The respondents were also asked to execute bonds.

4. Subsequently, two show cause notices dated 28.7.1995 and 25.10.1995 were issued to the respondents. Those show cause notices were for the period January to August, 1995. Pending adjudication of these proceedings, the respondents followed the directions issued in the letter dated 26-7-1995 and cleared the samples on the basis of a provisional assessment and on executing bonds/bank guarantees.

5. In respect of the two show cause notices, which had been issued, adjudication took place on 16th March, 1998. Thereafter, as the KVSS was floated, the respondents applied under this Scheme in respect of the subject matter of those two show cause notices. These declarations were accepted and they were given the benefit of the Scheme.

6. For the subsequent period i.e. from 1-9-1995 to 31-1-1998, a show cause notice was issued on 16th March, 1999. Assessment then took place on 17th September, 1998. The respondents then applied under the KVSS for this period also. The respondents declaration was returned on the ground that for this period no show cause notice had been issued to them prior to 31st March, 1998. It was pointed out that the show cause notice bad been issued much after the relevant date i.e. 31-3-1998.

7. The respondents then filed a writ petition in the High Court seeking a direction that the declaration filed by them be accepted and that they be given benefit under the Scheme. By the impugned judgment, the writ petition has been allowed. The High Court has held that the Scheme being a beneficial one a liberal interpretation must be given. The High Court has held that the letter dated 26-7-1995 "tantamounts to a show cause notice" and "it is in the nature of a show cause notice". On that basis, the High Court has directed the appellants to process the declaration of the respondents. The High Court has also quashed the show cause notice dated 16th March, 1999.

8. If benefit is sought under a Scheme, like the KVSS, the party must fully comply with the provisions of the Scheme. If all the requirements of the Scheme are not met then on principles of equity, Courts cannot extend the benefit of that Scheme.

9. Let us now see the provisions of the Scheme. Under the Scheme "tax arrears" has been defined under Section 87(m). The said Section reads as follows:-

"(m) "tax arrear" means-

(i) In relation to direct tax enactment, the amount of tax, penalty or interest determined on or before the 31st day of March, 1998 under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration:

(ii) In relation to indirect tax enactment-

(a) the amount of duties (including drawback of duty, credit of duty or any amount representing duty), cesses, interest, fine or penalty determined as due or payable under that enactment as on the 31st day of March, 1998 but remaining unpaid as on the date of making a declaration under Section 88; or

(b) 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 or a show cause notice issued on or before the 31st day of March, 1998 under that enactment