TMI Blog2016 (1) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... held or recorded by him in the course of proceedings before him”. For the Respondents to say, therefore, in paragraph 2 that the Settlement Commission is “not a forum for evaluating evidence or deciding a matter involving complicated issues of facts and law” is clearly incorrect. We will assume for the purpose of this Petition that a copy of the Revenue’s report was in fact made available to the Petitioners. We find, however, that the Petitioner was given no opportunity of meeting it. The Settlement Commission seems to have straightaway accepted that Report not only as gospel, but as totally incontrovertible, and incapable of being subjected to any rational settlement. There is absolutely no basis for this, other than the Settlement Commission saying, to all intents and purposes, that the matter is apparently too onerous and too taxing on the Settlement Commission’s time, energy and resources. This is wholly unacceptable. The very least the Settlement Commission ought to have done, in our view, was to give the Petitioner an opportunity to respond to the Revenue’s observations and Report. Had the Petitioners then failed to do so, or if, on a close examination, that response was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Department under registration No. AAFFC3158GST001. 4. During the Financial Years 2007-2008 to 2010-2011, the Petitioners claim to have suffered a set back in their business. This is inter alia attributed to various prominent clients defaulting in paying the Petitioners fees for event management services rendered. The Petitioners say that they had no option but to write off the amounts of unpaid fees by reversing the entries in question in their books of account. 5. 1During this period (FY 2007-2008 to 2010-2011) in view of the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, service tax was payable by the 5th of the month immediately following the calendar month in which payments were received for taxable services rendered and billed. For assessees who were individuals, proprietorship or partnership firms, service tax was payable quarterly, by 5th of the month following the quarter in which such payments were received. According to the Petitioners, their liability to pay service tax would have arisen only on their receiving fees from their clients. The Petitioners claim that since they had not received fees from some of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event management services. In other words, since the fees charged by the Petitioners had not been paid, the amounts were reversed. It was also pointed out that an amount of ₹ 2,00,000/- due from Reliance Broadcast Network for the FY 2010-2011 was written off since the party did not agree to pay these amounts. Supporting documents were forwarded along with this response. Exhibit E , pp.56-57 The Petitioners recomputed the amounts that, according to them, were due and arrived at a figure of ₹ 20,84,792/-. This was paid along with interest of ₹ 16,77,519/-. Thus, a total amount of ₹ 37,62,311/- was paid between 21st September 2012 and 22nd May 2014. Details of these payments, giving their dates, amounts and corresponding challan numbers are set out in the tabulation below paragraph 13 of the Petition. 9. On 19th April 2013, the Joint Commissioner issued a showcause notice to the Petitioners proposing to recover service tax of ₹ 36,61,893/- for FY 2007-2008 to 2010-2011 along with interest and penalties. Exhibit F , pp.58-65 10. The Petitioners say that since they had accepted that there was a short payment of service tax and had in fact paid an am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd December 2014, the Petitioners received a communication stating that since one of the Members of the Settlement Commission has retired, a fresh date for re-hearing of the matter was scheduled on 15th January 2015. At that hearing, the Settlement Commission noted that no report had been received so far from the Revenue despite specific directions in that behalf. The response from the Revenue s representative was that he was unaware of any such directions. The Settlement Commission, therefore, adjourned the matter with a specific direction to submit a report within 10 days. Exhibit P , pp. 165-166 14. The Petitioners then received the impugned Final Order dated 18th February 2015 by which the Settlement Commission rejected the Petitioners Application as not admissible. The Final Order indicates that the Revenue had given its Report on 4th February 2015 and that this showed that the claim of the Petitioners could not be accepted. The Settlement Commission purported to note that the Petitioners did not have sufficient supporting documentation. 15. In the Petition, a grievance is made Paragraph 29(A)7 at page 17 that the Revenue s Report was never supplied to the Petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e will turn to this paragraph presently, as it appears to us to be one that vitiates the entire basis of the Final Order impugned in this Petition, but before we do so it is necessary only to note that the Affidavit in Reply does not contain a parawise traverse of the Petition. Some of the claims by the Petitioners are disputed but in paragraph 3, Mr. Dwivedi says that a copy of the verification report was made available to the Petitioners authorized representative, one Mr. Piyush Satra, on 5th February 2015. In our view, this is insufficient. What was required to be given to the Petitioners was a copy of the Revenue s Report and also an opportunity of dealing with it. That opportunity appears to us clearly to have been denied. 18. We have also carefully considered the impugned order in question. From paragraph 8.1 onwards of the Report, we find the findings of the Settlement Commission. In paragraph 8.5, the Settlement Commission opines: 8.5 From the above it is seen that every aspect of Revenue s investigations and conclusions have been challenged by the Applicant. Even the facts of the case have not been accepted by both sides. There is thus no meeting ground at all bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was thus held that if the case involves highly complex and disputed questions of fact for which detailed inquiry is necessary, the Settlement Commission should refer the matter back to the adjudicating officer to be taken up from the stage from which the matter was before such officer just before the making of the settlement application. 51. The above principles were reiterated by two other judgments of this Court:- (i) Ashwani Tobacco Company Pvt. Ltd. V UOI Ors., 2010(251) E.L.T. 162 (Del.); (ii) Director General or Central Excise (intelligence) v. Murarilal Harishchandra Jaiswal Pvt. Ltd. And Ors., 172 (2010) DLT 593 + 2013(291) E.L.T. 484 (Del.) 52. In the second of the above decision, this Court observed the where at the admission stage under Section 127 C (1) the case throws a high decree of variation between the facts and contentions of both the parties before the Settlement Commission , then in such a case the Settlement Commission should not even admit an application because it is clear that the Department of Customs does not accept the duty which an Applicant feels is payable by him and therefore is bound to inquire into highly disputed ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfers on the Central Excise Officer the power to summon persons to given evidence and to produce documents in enquiries under this Act. From this it is at once clear that the Settlement Commission has plenary powers to summon and take evidence. If there was any doubt about this, it is completely set at rest by the plain wording of Section 32-L(2) which speaks specifically of the Central Excise Officer being entitled to use all the materials and information produced by a petitioner before the Settlement Commission, or the result of the enquiry held or evidence recorded by the Settlement Commission in the course of proceedings before it as if such materials, information, enquiry and evidence had been produced before such Central Excise Officer or held or recorded by him in the course of proceedings before him . For the Respondents to say, therefore, in paragraph 2 that the Settlement Commission is not a forum for evaluating evidence or deciding a matter involving complicated issues of facts and law is clearly incorrect. We are surprised to find precisely this observation in paragraph 8.5 of the impugned order. This finding is contrary to the plain wording of the statute. 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gid approach and favoured a statutory regime that allows the defaulting taxpayers to come clean. The purpose is to avoid an unnecessary burden on Government resources. This is, clearly, the statutory mandate. 24. We will assume for the purpose of this Petition that a copy of the Revenue s report was in fact made available to the Petitioners. We find, however, that the Petitioner was given no opportunity of meeting it. The Settlement Commission seems to have straightaway accepted that Report not only as gospel, but as totally incontrovertible, and incapable of being subjected to any rational settlement. There is absolutely no basis for this, other than the Settlement Commission saying, to all intents and purposes, that the matter is apparently too onerous and too taxing on the Settlement Commission s time, energy and resources. This is wholly unacceptable. The very least the Settlement Commission ought to have done, in our view, was to give the Petitioner an opportunity to respond to the Revenue s observations and Report. Had the Petitioners then failed to do so, or if, on a close examination, that response was found on merits to be without substance, the application could have b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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