High Court of Karnataka Allows Appeal in Central Excise Case Due to Abatement Under Section 35G of Central Excise Act, 1944 — Settlement Under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 Renders Proceedings Infructuous and Extinguishes Liability.

High Court: Karnataka High Court Bench: BENGALURU In Favour of Accused

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2026-05-18 12:16:05

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Case Note & Summary

The appellant, M/s Patanjali Foods Limited (formerly Ruchi Soya Industries Ltd), filed an appeal under Section 35G of the Central Excise Act, 1944, challenging Final Order No. 21234/2023 dated 09.11.2023 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore. The CESTAT had confirmed a demand of central excise duty against the appellant. During the pendency of the appeal before the High Court, the appellant availed the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS), a government scheme for settlement of legacy disputes under central excise and service tax. The appellant obtained a discharge certificate under the Scheme, which covered the demands that were the subject matter of the appeal. The appellant contended that in view of the settlement, the proceedings had become infructuous and should be abated, and any liability stood extinguished. The respondent, Commissioner of Central Excise and Service Tax, did not dispute the fact that the appellant had availed the Scheme. The High Court, after hearing both sides, held that once a settlement is reached under the SVLDRS, the proceedings in relation to the demands covered by the settlement become infructuous and abate. The court allowed the appeal, set aside the impugned order of CESTAT, and declared that any liability of the appellant in relation to the impugned demands stands extinguished.

Headnote

A) Central Excise - Abatement of Proceedings - Section 35G of Central Excise Act, 1944 - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - The appellant challenged the final order of CESTAT confirming demand of central excise duty. During pendency of appeal, appellant availed the Sabka Vishwas Scheme and obtained a discharge certificate. The court held that once a settlement is reached under the Scheme, the proceedings in relation to the demands covered by the settlement become infructuous and abate, and any liability of the appellant stands extinguished. (Paras 1-10)

B) Central Excise - Settlement under SVLDRS - Finality of Settlement - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - The court held that the settlement under the Scheme is final and conclusive, and no proceedings can be continued in respect of the dues covered by the settlement. The appeal was allowed, and the impugned order was set aside. (Paras 8-10)

Issue of Consideration

Whether the proceedings in relation to the impugned demands have become infructuous and stand abated in view of the appellant having availed the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and consequently, whether any liability of the appellant stands extinguished.

Final Decision

The appeal is allowed. The impugned Final Order No. 21234/2023 dated 09.11.2023 passed by the Customs, Excise and Service Tax Appellate Tribunal, Bangalore is set aside. It is held that the proceedings in relation to the impugned demands have become infructuous and stand abated, and any and all liability of the appellant in relation to the impugned demands stands extinguished.

Law Points

Abatement of proceedings
Settlement under SVLDRS
2019
Section 35G of Central Excise Act
1944
Finality of settlement
Extinguishment of liability

Case Details

2024 LawText (KAR) (09) 58

CEA No.6 OF 2024

2024-09-30

S.G. Pandit, C.M. Poonacha

Sri Rajesh Rawal, Sri Chandrashekar Reddy K P, Sri Jeevan J Neeralgi

M/S Patanjali Foods Limited (Formerly Known As M/S Ruchi Soya Industries Ltd)

Commissioner of Central Excise and Service Tax

Nature of Litigation

Appeal under Section 35G of Central Excise Act, 1944 against final order of CESTAT confirming demand of central excise duty.

Remedy Sought

Appellant sought to have the proceedings declared infructuous and abated, and liability extinguished, in view of settlement under Sabka Vishwas Scheme.

Filing Reason

Appellant challenged the CESTAT order confirming duty demand, but during pendency availed settlement under SVLDRS.

Previous Decisions

CESTAT passed Final Order No. 21234/2023 dated 09.11.2023 confirming the demand.

Issues

Whether the proceedings in relation to the impugned demands have become infructuous and stand abated in view of the appellant having availed the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Whether any liability of the appellant in relation to the impugned demands stands extinguished.

Submissions/Arguments

Appellant submitted that it had availed the Sabka Vishwas Scheme and obtained a discharge certificate, rendering the proceedings infructuous and liable to be abated. Respondent did not dispute the fact that appellant availed the Scheme.

Ratio Decidendi

Once a settlement is reached under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the proceedings in relation to the demands covered by the settlement become infructuous and abate, and any liability of the appellant stands extinguished.

Judgment Excerpts

The present appeal is filed under Section 35G of the Central Excise Act, 1944. During the pendency of the appeal, the appellant has availed the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. In view of the above, the proceedings in relation to the impugned demands have become infructuous and stand abated. Any and all liability of the appellant in relation to the impugned demands stands extinguished.

Procedural History

The appellant filed CEA No.6 of 2024 under Section 35G of Central Excise Act, 1944 challenging Final Order No. 21234/2023 dated 09.11.2023 of CESTAT, Bangalore. During pendency, appellant availed Sabka Vishwas Scheme. The appeal was reserved for judgment on 23.09.2024 and pronounced on 30.09.2024.