Union Of India & Ors vs Onkar S. Kanwar & Ors on 27 September, 2002
From the aforesaid ratio laid down by the Apex Court, it is clear that only when the tax arrear arises from the same matter (emphasis supplied), then the declaration made by the principle noticee will cover all other persons against whom show cause notice has been issued. In the instant case, heavy penalty of Rs. 15,00,000 has been levied upon the Petitioner on account of his involvement in fabricating bogus documents with which the main noticee M/s. Choice Laboratories was not concerned at all. Therefore, when the penalty imposed upon the main noticee and the co-noticee arise from distinct and separate causes of action, merely because a common show cause notice has been issued, it cannot be said that the partial declaration /settlement made by the main noticee will be applicable to the Petitioner. In the light of the aforesaid ratio laid down by the Apex Court, the Petitioner herein cannot succeed because, firstly, there is no total settlement and secondly, the penalty levied upon the main noticee and the Petitioner, do not arise from the same matter but arise from different causes of action. Mr. Bulchandani drew our attention to the ratio laid down by the Apex Court in the above case to the effect that if two views are possible, then the view which is in favour of the assessee must be adopted. In our opinion, in the instant case where there is only partial settlement and the penalty levied upon the main noticee and the Petitioner are based on separate causes of action, the only view that can be taken in the instant case, is that the settlement of the main noticee will not be available to the Petitioner."