Co-Noticees Cannot Be Penalized Independently Once Main Noticee Settles Dispute Under SVLDRS Scheme: CESTAT

In a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that once the main noticee in a dispute settles the case under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), 2019, penalties cannot be independently imposed on the co-noticees. The tribunal emphasized that the SVLDRS was introduced to reduce litigation and provide a clean slate. The scheme's design implies that a settlement by the primary entity responsible for the tax liability covers the entire dispute. Therefore, continuing proceedings and imposing penalties on co-noticees, who are typically employees or directors implicated in the same case, would defeat the very purpose of the amnesty scheme. This decision provides crucial relief to co-noticees, affirming that their liability is intrinsically linked to the main noticee's and is extinguished once the principal dispute is settled under the scheme, ensuring a complete and final resolution.