TMI Blog2018 (4) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Commission is not the right forum to decide upon contentious issues, by evaluating the evidences let in by the rival parties to the proceedings. Such an act would tantamount to the Settlement Commission adjudicating upon the notice, based on the submissions made by the rival parties to the proceedings. Further, in view of the complexities involved in the case, where there seems to be no convergence of views on the correct rate of tax, value on which tax is to be paid for determination of the correct tax liability, a detailed appreciation of all the facts and evidences is required, which could be best done only in departmental adjudication - It is now a well settled proposition that the Settlement Commission is not an adjudicating authority. It is only an arbitration forum where a dispute is settled in the interest of both the parties within the framework of law. The Bench, by virtue of the powers vested in it in terms of Section 32L of the Central Excise Act, 1944, made applicable to Service Tax matters under Section 83 of the Finance Act, 1994 sends the case back to the Adjudicating Authority for adjudication in accordance with the provisions of the law - matter on ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2853843 0 166200 2009-10 28434875 25929730 2505145 0 165600 2010-11 31179020 21113153 10165867 0 165600 2011-12 21952713 14759873 7192840 0 165600 2012-13 19326373 9423295 9903081 93355 190440 1.3 The applicant had declared the taxable value in respect of Erection, Commissioning Installation Services, Maintenance and Repair Services, and Business Auxiliary Services in the ST-3 returns for the period Oct., 2007 to Dec.,2012 as below: Period Taxable value declared as per ST-3 (Rs.) 10/2007 to 03/2008 13,88,177 2008-09 24,47,096 2009-10 17,47,059 2010-11 43,61,601 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7057 2010-11 165600 10.3% 17057 2011-12 165600 10.3% 17057 2012-13 142830 12.36% 17654 98,266 1.6 During the course of verification, it was noticed that the applicant had filed VCES I on 26-12-2013, subsequently revised vide VCES-I (revised) on 30-12-2013 declaring Service Tax liability in respect of Rental income as ₹ 85,176/- and in respect of Erection, Commissioning and Installation Services As ₹ 1,01,104/- totalling ₹ 1,86,280/- for the period from 10/2007 to 12/2012.the applicant also paid the first instalment of 50% liability on 28-12-2013 and the 2 nd instalment on 15-7-2014. On comparing the Service Tax liability for the same period, it appeared that the VCES-I filed by the applicant was substantially false as the applicant had not fully declared the Service Tax liability for the period from 10/2007 to 12/2012 in respect of the services provided by them. The applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has not shown the sale value separately in the invoice and in absence of any documentary proof indicating value of goods and materials, they did not avail Notification No. 12/2003S.T. As sale of goods as well as services are involved in the execution of service by the applicant, the same will be covered under Works Contract Service and Service Tax leviable at concessional rate in terms of Notification No. 32/2007-S.T., dated 22-5-2007. Both sale of goods and service is involved in the labour charges' mentioned in the balance sheet apart from Sale of Goods which is exclusively mentioned in the balance sheet. The applicant has calculated the Service Tax on the total value on the basis of works contract and for the years 2007-08 to 2011-12, the applicant has paid excess Service Tax over and above the tax payable and there is short payment of Service Tax of ₹ 4,29,880/- for the period 2012-13 (upto Dec 2012) which is admitted and paid. The applicant filed S.T.3 returns for the period from October 2007 to December 2012 belatedly and could not pay the late fees due to extreme financial trouble The applicant prayed for waiver of late fee and requested the Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation statement for the period October, 2017 to December, 2012 and the contention appears to be an afterthought. They have also not produced any evidence to prove that they were rendering Works Contract Services. The applicant had not exercised any option as to payment of Service Tax in terms of Notification No. 32/2007-S.T. before paying Service Tax at full rate on a portion of labour charges without any abatement under Notification No. 12/2003-S.T. The applicant has also not shown sale value separately in the invoices. The contention of the applicant is not acceptable as the condition of prior intimation is mandatory and not a technical deviation. The applicant, being a provider of Erection Commissioning service of Air conditioners, are in a position to account for the material cost and labour charges separately in the Balance sheet and whereas works contract is applicable only when the applicant is not able to segregate the material portion and service portion of contract. The contention of the applicant that they had paid Service Tax of ₹ 4,29,880/-and interest of IQs. 3,34,397/- for Works contract for the period April, 2012 to December, 2012 is not accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation' in the ST-3 Returns filed by them as well as in the VCES application; and accordingly they arrived at their Service Tax liability. The Advocate submitted that as they received the Jurisdictional Commissioner's report C. No. IV/3/2/2017-R T(SC,) dated 1-6-2017, only yesterday, prayed for two weeks' time for filing their detailed comments on the same. 4.4 The learned departmental representative reiterated the contents of the Commissioner's said report dated 1-6-2017, and stated that the applicant had earlier declared the services under 'Erection, Commissioning or Installation Service' and as an after thought now they are trying to re-classify the services under 'Works Contract Service' and also seeking deduction of certain amount from the invoice value claiming that the same represents sale of material to their clients; that though the applicant have claimed that they paid Service Tax on labour charges, they have not produced any reconciliation statement for the period from 10/2007 to 12/2012 during the course of investigation; that the applicant is required to exercise their option to pay Service Tax under composition scheme before payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1-6-2007. The department's contention that the applicant is trying to reclassify the services under Works Contract Services is against law and as well as Board's circular In view of the positive compliance and co-operation by the applicant, the case may be settled by the Bench and they may be granted total immunity from penalty and prosecution. 5.2 In response to the above submissions of the applicant, the Jurisdictional Commissioner vide C. No. V/15/39/2017 Ch N Adj., dated -9-2017, made re following further submissions; The main contention between the department and the applicant is whether the exercise of option of works contract service during the mid-contract/provision of services without opting before the start of the contract or payment of first Service Tax on such contracts. The applicant has cited two cases in support of their claim that such lapses construed as technical in nature and liable to be condoned. The cases cited by the applicant cannot be considered as similar in facts and cannot be taken as valid case law. The applicant has admitted that he has provided Erection, Commissioning or Installation Services as evident from the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Composition Scheme in terms of Notification No. 32/2007-S.T., dated 22-5-2007. The Bench finds that the applicant had filed VCES-I declaration disclosing their Service Tax liability upto December, 2012 and paid Service Tax at full rate on Erection, Commission and Installation Services and Renting of Immovable Property in two installments by declaring the labour charges, Gross value in the ST-3 returns filed. However, verification carried out by the Officers revealed that the applicant has not correctly declared the value in the VCES declaration resulting in difference in the taxable value of ₹ 1,71,27,564/- for the period from 7/2007 to 12/2012. 6.3 Perusal of the application revealed that the applicant has sought reassessment of Service Tax liability in respect of Erection, Commissioning or installation services under the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 for the period upto 30-6-2012. The applicant by claiming a lesser rate of tax at 2%/4%/4.8% on the same Taxable value for the period 10/2007 to 6/2012 in the Settlement application has indirectly claimed excess payment of tax by them under VCES and as per their self asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual position. Taking into consideration the wide difference in tax liability as worked out in the impugned SCN End the liability admitted by the applicant, the Bench considered it fit and allowed the applicant to make further submissions and produce additional documentary evidences, if any, to the jurisdictional Commissioner. Accordingly ordered so. While the applicant has furnished only a reconciliation statement for the years 2010-11 and 2011-12 without any documentary proof and further stated that the documents were washed away in floods the jurisdictional Commissioner in response to the applicant's claim pointed out that acceptance to pay tax on the Services by the applicant under Works Contract Service under Composition Scheme would lead to interpretation seeking re-classification of services for which no application could be made before the Commission in terms of Proviso to Section 32E (1) of the Central Excise Act, 1944 made applicable to Service Tax matters vide Section 83 of the Finance Act, 1994. 6.7 The Bench observes that though the applicant has not challenged the classification of services rendered, per se, it is apparent that the applicant having paid Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commission is not an adjudicating proceedings where it is for the other side to prove its case. In settlement proceedings, a party seeks to end the dispute and is meant for a person who is sorry about his conduct and wants to make amends. It is not an alternative adjudicating forum. A person approaching the Settlement Commission must show utmost good faith. 6.10 In the Dharampal Satyapal case [2013 (298) E.L.T. 653], the Delhi High Court lucidly stated the scope of Settlement Commission, when the Hon'ble Court observed: 49. The other principle which has been set down in several judgments of this Court is that the Settlement Commission is not a substitute for adjudication proceedings before the Central Excise authorities and where complex issues of fact and law are involved for which a detailed inquiry is necessary, settlement proceedings cannot act as a proper substitute for the adjudication proceedings 6.11 In Picasso Overseas and Others v. Director General of Revenue (Intelligence) and Another [W.P.(C) No. 1495 of 2007 and W.P.(C) No. 4401 of 2007] decided on 3-8-2009 the issue posed before the Hon'ble High Court of Delhi was as under: .....can the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of fact and law as the applicability of the provisions of law like the one in hand where in the issue centres around the of whether Section 4 or Section 4A of the Central Excise Act. Though the assessee has admitted the short levy on dough and paid the duty thereof since he is raking up the plea that he is eligible to claim benefits under section4A instead of Section 4, that point goes out of the jurisdiction of the settlement Commission, since it has not been vested with the power to decide such a question of direct assessment. By such an act, the Settlement commission has usurped the jurisdiction of the adjudicating authorities and as had been rightly commented on the part of the Revenue, by the impugned order, the Settlement Commission has set a bad precedent. 6.14 In the case of M/S. Fairy Footwear v. Union of India [2015 (323) E.L.T. 469 (Bom)], the Hon'ble High Court of Bombay held that: Revenue was keen on supporting allegation and based on which the show cause notice came to be issued. Whereas the applicant - petitioner before us was not ready and willing to accept the same. If there was no settlement possible, then, the Commission should have relegated th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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