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2020 (2) TMI 1287 - MADRAS HIGH COURTSettlement Commission order in terms of Section 245D(2C) - whether the contract is divisible or indivisible is a matter laid before the Commission for consideration? - Commissioner has done in his report is only to reiterate the stand of the Department that the contr acts are, in fact, and in his opinion, indivisible - SC in considering the ‘validity’ or otherwise of the application proceeds to delve into the merits of the matter even at that stage, concluding that the contract was composite and indivisible and hence the applicant, i.e,. the petitioner herein, had failed to make a full and true disclosure of income. HELD THAT:- Certainly, if the Commission decides adverse to the petitioner in final hearing, holding that the contract and transactions were composite and indivisible, there would be an additional tax liability upon the petitioner. This demand however can be raised only once a decision has been rendered in terms of Section 245D(4) by the Commission on the issues posed before it, the first of which is, whether at all the income from offshore supply is liable to tax in India. The question of full and true disclosure and the discharge of tax liability at all stages prior to final hearing, should be seen only in the context of the issues offered for settlement and the remittances of additional tax thereupon. Issues decided by the Commission and liability arising therefrom, will be payable only at the stage of such determination, which, in my considered view, is the stage of final hearing under Section 245D(4). Thus a final order passed by the SC will provide for the terms of settlement that can include any demand by way of tax, penalty or interest as well. Evidently, this demand raised after final settlement, can only refer to such issues as has been decided by the Commission over and above the additional income disclosed and tax paid by the assessee at the time of filing of application. This been envisaged and provided for in the statutory scheme of settlement under the Act. The scheme of Chapter XIX A is to provide a wholistic resolution of issues that arise from an assessment in the case of an assessee that has approached the Commission. Once an assessee has approached the Settlement Commission at the appropriate stage (in the case of this petitioner, there is no dispute on this score) all issues in relation to the assessment for that assessment year are at large before the SC. This is evidently to ensure that a single forum, a high powered one at that, will take into account the submissions of both parties and arrive at a decosopm on all issues that arise from such case/proceeding, in a comprehensive manner. The impugned order of the Settlement Commission is beyond the scope of Section 245D(2C) having been passed on the merits of the issue raised and set aside the same. This Writ Petition is allowed. No costs. Connected Miscellaneous Petitions are closed.
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