Law: Income Tax Act, 1922

Section:

Section 91 of the Finance (No. 2) Act, 1998, read with KVSS (Removal of Difficulties) Order - Kar Vivad Samadhan Scheme - One show-cause notice was issued by excise authorities on company and directors/officers alleging evasion of excise duty - Subsequently, show-cause notice was adjudicated requiring company to pay tax arrears and penalty - Further, each director/officer was required to pay personal penalty - When appeal was pending before Tribunal, KVSS 1998 was announced - Company and directors/officers filed separate declarations - Commissioner determined settlement assessment - Company paid amount so determined - Directors/officers also paid amounts determined for them, which they claimed to have been paid under protest - Subsequently, in writ, directors/officers claimed that as company had settled issue under KVSS, directors/officers would be entitled to refund of amount personally paid - Whether matter covered in declaration by company was 'tax arrears' of company which did not cover arrears of directors/officers and, therefore, directors/officers would get no immunity under section 91 on a settlement by company - Held, yes - Whether a settlement by main declarant was to operate as full and final settlement in respect of all other persons on whom show-cause notice was issued in respect of same matter - Held, yes - Whether object of Kar Vivad Samadhan Scheme (Removal of Difficulties) Order is to give benefit of a settlement by main party (i.e., company in instant case) to all other co-noticees and that being object, a classification restricting benefit only to cases where show-cause notice is pending adjudication, would be unreasonable - Held, yes - Whether, therefore, words 'pending adjudication' cannot be read to exclude cases where proceedings are still pending in appeal - Held, yes - Whether since all officers paid amounts in pursuance of declaration made by them under section 88, even if they had paid amounts under protest, they were not entitled to refund by virtue of section 93 which prohibited refund under any circumstances - Held, yes FACTS The company had units in the States of Kerala and Gujarat. They claimed that they were manufacturing tyres…

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