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2018 (2) TMI 1248 - HC - Service TaxApplication for settlement u/s 32 of the CEA 1944 - security agency and manpower recruiting agency service - It is the case of the petitioner that on account of prevailing fluid situation about applicability of the service tax to security service agency, the service tax was not paid for the particular disputed period. However, after the visit by the officers, the service tax was substantially paid. Held that: - The order of the Settlement Commission is passed on three findings. Firstly, the Settlement Commission was not convinced with the explanation offered by the petitioner regarding the circumstances for not filing the returns referred to in sub-clause-(a) to proviso to Section 32E(1), secondly, impliedly, the petitioners have not made true and full disclosure and thirdly, that the case was pending for decision before the CESTAT in an appeal filed by the Revenue. Upon receipt of the application under Section 32E, the Settlement Commission is required to issue notice within seven days on receipt of such application, calling upon such applicant to explain in writing why the application made for settlement should be allowed to be proceeded with - in connection with the hearing, a communication dated 19.12.2014 came to be issued, informing the petitioners about date of hearing on 08.01.2015. In-between, there does not appear to be any communication with regard to the application before the Settlement Commission. The affidavit in reply on behalf of the Department also does not indicate any proceedings in-between. With regard to the ground regarding pending appeal before the CESTAT, it would be pertinent to mention that the so called pending proceeding referred to by the Settlement Commission pertains to coercive action initiated under Section 87 of the Finance Act, 1994 freezing five bank accounts of the petitioners. The appeal of the petitioners came to be allowed by the Commissioner (Appeals) by its order dated 23.12.2013, against which the Department has preferred appeal before the CESTAT. In the opinion of this Court, such proceeding, for the purpose of this case, cannot be considered as a restriction under 3rd proviso to Section 32E(1) to entertain the application for settlement. Admittedly the petitioner had not paid the full tax on admitted liability. Settlement Commissioner was therefore, correct in not entertaining the application for settlement on this ground. The statute requires that along with the application, the applicant must deposit the entire tax on admitted liability - petition dismissed.
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