Court Quashes Rejection of Declaration, Directs Department to Process Under Legacy Dispute Resolution Scheme
In a significant decision, the Rajasthan High Court has ruled in favor of M/s Premier Bars Private Limited, allowing the inclusion of redemption fines under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. This decision comes after the company's declaration under the scheme was rejected by the Designated Committee on the grounds of ineligibility, specifically that redemption fines were not covered.
The court, comprising Justices Arun Monga and Maneesh Sharma, delivered its judgment on July 18, 2026, quashing the rejection order dated November 12, 2019. The petitioner's declaration had been dismissed on the premise that a redemption fine in lieu of confiscation did not fall within the scope of the scheme, a position the court found contrary to the provisions of the Finance (No. 2) Act, 2019.
The High Court referenced the Gujarat High Court's judgment in the case of M/s Synpol Products Pvt. Ltd., which had established that redemption fines were indeed covered under the scheme. The Gujarat High Court's decision had previously been upheld by the Supreme Court, further strengthening the Rajasthan High Court's stance.
The court emphasized that the scheme aimed to reduce litigation by providing a window for taxpayers to settle legacy disputes. It concluded that redemption fines form part of the duty recoverable under indirect tax enactments and, therefore, should not disqualify declarations under the scheme.
The Rajasthan High Court directed the respondent department to treat the declaration of M/s Premier Bars Private Limited as eligible under the scheme and to proceed in accordance with the law.
This judgment is seen as a pivotal interpretation of the Sabka Vishwas Scheme, potentially impacting numerous cases involving similar disputes over redemption fines and offering clarity for taxpayers seeking to resolve longstanding tax issues.
Bottom line:-
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Redemption fine imposed in lieu of confiscation of goods is covered under the Scheme - Cases involving redemption fines are not excluded under Section 125 of the Finance (No. 2) Act, 2019 - Rejection of declaration on the ground of ineligibility is contrary to the Scheme.
Statutory provision(s): Section 125 of the Finance (No. 2) Act, 2019, Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
