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Issues Involved:
1. Quashing of the order dated 13-8-2001. 2. Direction to restrain from realizing the penalty of Rs. 5 lacs on each petitioner. 3. Direction to grant the benefit of waiver of penalty under the Kar Vivad Samadhan Scheme (KVSS) to the petitioners. Issue-wise Detailed Analysis: 1. Quashing of the Order Dated 13-8-2001: The petitioners contested the order dated 13-8-2001, passed by the Tribunal, which rejected their application for rectification of mistake under Section 35C(2) of the Act. The Tribunal had previously upheld the penalties imposed on the petitioners by the adjudicating authority. The petitioners argued that the Tribunal's order was inconsistent with the statutory provisions of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998, which should have granted them immunity from penalties as co-noticees of the firm, M/s. Ashoka Boot Factory, which had settled its dues under the scheme. 2. Direction to Restrain from Realizing the Penalty of Rs. 5 Lacs on Each Petitioner: The petitioners were partners in M/s. Ashoka Boot Factory and were individually penalized Rs. 5 lacs under Rule 209A of the Central Excise Rules. They argued that once the firm settled its tax arrears under the Kar Vivad Samadhan Scheme, they, as co-noticees, should also be granted immunity from penalties. The Tribunal, however, had held that the scheme did not cover cases where penalties were adjudicated and imposed prior to the scheme's enactment. 3. Direction to Grant the Benefit of Waiver of Penalty Under the Kar Vivad Samadhan Scheme (KVSS) to the Petitioners: The petitioners sought the benefit of the Kar Vivad Samadhan Scheme, which provided for the waiver of penalties upon the settlement of tax arrears. The scheme was designed to settle tax disputes by allowing taxpayers to pay a portion of the arrears in exchange for immunity from penalties and prosecution. The petitioners argued that the scheme's Removal of Difficulties Order, 1998, should extend this benefit to them as co-noticees, even though their penalties were adjudicated. The High Court referred to the Division Bench of Kerala High Court's interpretation of the scheme, which stated that the expression "pending adjudication" should include cases where appeals against adjudication proceedings are pending. This interpretation was upheld by the Supreme Court in the case of Union of India & Others v. Onkar S. Kanwar & Others, which confirmed that the benefit of the scheme should extend to all co-noticees, regardless of whether the penalties were adjudicated or pending in appeal. Conclusion: In light of the Supreme Court's decision, the High Court held that the petitioners were entitled to the benefit of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998. The court quashed the Tribunal's orders dated 13-8-2001 and 17-11-1999, and declared that the petitioners were not liable for the penalties imposed on them. The writ petition was allowed, granting the petitioners immunity from the penalties as co-noticees of the firm, which had settled its tax arrears under the scheme.
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