Facts of the Case

The Petitioners – Lokesh Pathak, M P Pathak (deceased through LR), Art N Glass India Pvt. Ltd. and others – challenged non‑issuance of discharge certificates under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (“SVLDR Scheme”), in respect of a central excise show cause notice issued in 2005. The SCN involved demand of central excise duty, interest, penalties, confiscation of goods, and redemption fines. Subsequent adjudication and appellate orders remanded the matter for fresh decision, but the Designated Committee under the SVLDR Scheme declined benefit, especially with reference to redemption fine and seizure cases, leading to writ petitions before the High Court. 

Issues Involved

  1. Whether the Petitioners were eligible to file declarations under the SVLDR Scheme despite appeals pending/decided prior to 30 June 2019.
  2. Whether redemption fine and seizure/ confiscation‑linked amounts constitute part of “tax dues” and qualify for relief/ discharge under the SVLDR Scheme.

Petitioner’s Arguments

  • The Petitioners contended that their SCN was pending adjudication at the relevant cut‑off date under the Scheme and thus they were eligible to declare their liability.
  • They argued that redemption fine imposed in lieu of confiscation is consequential to duty default and should be treated as part of “tax dues” so as to avail relief under the SVLDR Scheme. 

Respondent’s Arguments

  • The Respondent/ Committee argued that the Petitioners were ineligible because appeals were filed and decided before 30 June 2019, falling within exclusions of Section 125(1)(a) of the SVLDR Scheme.
  • They also contended that redemption fine and amounts related to seizure are not covered under the Scheme and thus cannot be waived or considered for discharge.

Court’s Order / Findings

The Delhi High Court held as follows:

The appeals before the CESTAT did not result in final adjudication on merits; they were remanded for fresh decision, and hence the Petitioners did not become ineligible under Section 125(1)(a).

Redemption fine arising from confiscation is consequential to non‑payment of duty and is properly part of “tax dues” under Sections 121‑123 and 124 of the SVLDR Scheme.

The Scheme’s language and intent require that amounts such as redemption fine be considered part of duty liability for relief calculations, and such amounts do not fall outside waivable categories of duty, interest, penalty under the Scheme.

Reliance was placed on decisions of other High Courts (e.g., Synpol Products Pvt. Ltd., M/s Jay Shree Industries, Shoe Sales Corporation, etc.) which held that redemption fine forms part of “penalty/ duty due” and cannot be excluded from SVLDR benefits.

Consequently, the writ petitions were allowed. The impugned non‑consideration of declarations by the Designated Committee was quashed, and the Committee was directed to consider the applications and issue discharge certificates in accordance with law. 

Important Clarification

• “Redemption fine” is not a standalone exclusion under the SVLDR Scheme but is integrated into the concept of tax dues because it arises from non‑payment of duty.
• Final adjudication/ decision is the touchstone for eligibility for SVLDR, not merely filing of appeals.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/75408092025CW106222024_133516.pdf

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