TMI Blog2019 (9) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... he conduct of the petitioner cannot be said to amount to non-cooperation and the fact that the Settlement Commission has thought it fit to send the matter to the adjudicating authority as it was of the view that it does not have the jurisdiction to decide the dispute with regard to either applicability of service tax and/or entering into the questions raised before it, in the opinion of this court the Settlement Commission was not justified in sending the matter to the adjudicating authority under section 32-L of the Act which has serious consequences in view of the provisions of section 32-O(1)(iii) which postulate that where the case of such person is sent back to the Central Excise Officer having jurisdiction by the Settlement Commission under section 32L, then he shall not be entitled to apply for settlement under section 32E in relation to any other matter. In the opinion of this court, if the Settlement Commission was of the opinion that considering the nature of the dispute raised before it, the matter was required to be remitted to the adjudicating authority, it should have done so in the exercise of powers under section 32F(5) of the Act which empowers it to pass such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, a show cause notice dated 2nd March, 2016 came to be issued by the Principal Commissioner, Service Tax, Ahmedabad, inter alia, directing the petitioner company to show cause as to why penalty should not be imposed upon it. 4.3 Thereafter, the petitioner company filed an application dated 18th April, 2017, being SA (ST) No.145 of 2017 before the second respondent Customs, Central Excise and Service Tax Settlement Commission (hereinafter referred to as the Settlement Commission ), under section 32E of the Central Excise Act, 1944 (hereinafter referred to as the Act ) disclosing its tax liabilities, undertaking to remit the entire liability and further seeking immunity from penalty. The petitioner company disclosed in the application that it is obliged to remit total service tax liability of ₹ 5,26,90,101/-, out of which ₹ 4,68,36,080/- pertains to service tax under forward charge on output services and remaining amount of ₹ 58,54,021/- pertains to reverse charge mechanism. It is the case of the petitioner that the amount payable under reverse charge mechanism was already paid by the petitioner company and with respect to liability unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the petitioner that though the letter dated 19th June, 2017 stated that the first report was enclosed therewith, no enclosures were received by the petitioner company and therefore, the petitioner company addressed a communication dated 29th September, 2017, inter alia, requesting for a copy of that report. By a letter dated 3rd October, 2017, a copy of the first report was provided by the Settlement Commissioner to the petitioner company. 4.8 Upon receipt of the first report, the petitioner company discovered that in the first report, the Additional Commissioner objected to permitting the petitioner company to avail Cenvat credit. According to the Additional Commissioner, the petitioner company had failed to produce the Cenvat related documents at the time of investigation and further failed to avail Cenvat credit within the stipulated time. It is the case of the petitioner that since the report dated 9th June, 2017 was not provided to the petitioner company until 3rd October, 2017, when the matter came up for hearing on 5th October, 2017, the petitioner company made a representation a day earlier on the ground that since the revenue had not finalized its re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion that the petitioner company had failed to submit the invoices and other related documents. The petitioner company addressed a written representation to the Settlement Commission dated 27th December, 2017, inter alia, enumerating various documents provided by the petitioner company through various letters to the revenue department for verification of the Cenvat credit availed. 4.12 By the impugned order dated 11th June, 2018, the Settlement Commission rejected the application of the petitioner and sent the matter to the adjudicating authority under section 32L of the Act. 4.13 It is the case of the petitioner that upon receipt of the impugned order, it was found that the same was passed on the basis of the final report dated 2nd November, 2017. Neither was the communication of the Additional Commissioner dated 4th October, 2017, claiming that the second report was only an interim report, nor the third report dated 22nd November, 2017 was furnished to it. It is the case of the petitioner that the petitioner company was never allowed an opportunity to refute the contents of the third report, and on the contrary, it was kept under the belief that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner on four occasions cannot amount to the noncooperation as stipulated under section 32L of the Act as the petitioner has cooperated in every other way, by making full and complete disclosure as well as handing over all necessary documents in its possession for verification by the department. In support of such submission, the learned advocate placed reliance upon the decision of the Hyderabad High Court in the case of Anil Re-Rolling Mills v. Central Excise, (2015) 2 ALD 148 (DB), wherein it has been held that non-cooperation does not mean non-participation but rather means nondisclosure. 5.4 It was further submitted that even otherwise, a reading of the impugned order would indicate that the final order is passed on the ground that the Settlement Commission does not have the power to adjudicate a disputed question of fact and law and, therefore, section 32F(5) of the Act ought to have been invoked for passing the impugned order. It was submitted that by not remaining present, the petitioner has not delayed the proceedings in any manner, as due to pendency of reports from the department, the matter would not have proceeded in any case. 5.5 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order has been passed. It was submitted that the Additional Commissioner, Service Tax, by the above report had contested the issue of CENVAT credit claimed by the petitioner company and that the Settlement Commission accordingly, found that the case would necessarily involve proper appreciation of facts and circumstances based on the documents and records available with the petitioner and the correct interpretation of law and procedure and was of the considered opinion that the case should go through the rigors of adjudication proceedings before the appropriate revenue authority and, therefore, the Settlement Commission has held that it has no authority to adjudicate the dispute. The attention of the court was invited to paragraph 11.2 of the impugned order to submit that despite four opportunities having been granted to the petitioner, it failed to appear before the Settlement Commission without any valid reason and that despite the fact that the Settlement Commission had made it clear that the next opportunity of hearing is the final hearing, the petitioner failed to remain present. It was submitted that since the proceedings were getting time barred on 31.12.2017, the Settlem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression cooperation occurs at more places than one under the relevant chapters. In the ordinary parlance, the word cooperation, in the context of adjudication, is taken to mean the non-participation of the concerned party, in the proceedings. However, in the context of settlement, it has a different connotation, altogether. The cooperation in such instances connotes the true and full disclosure of the facts pertaining to the assessee; and noncooperation, the opposite of it. 8.1 It was submitted that in the present case the petitioner has made a full and true disclosure of the facts pertaining to it, and hence, the finding of non-cooperation is contrary to the meaning of such expression as contemplated under the provisions of Chapter V of the Central Excise Act. 9. In the aforesaid backdrop the facts of the case may be examined to ascertain whether the Settlement Commission was justified in holding that there was non-cooperation on the part of the petitioner. 10. In the facts of the present case, the petitioner has admitted a total liability of service tax amounting to ₹ 5,26,90,101/- proposed for recovery under the show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of issue of specified documents. In short, it appears that no report as directed by the Settlement Commission clearly stating whether the CENVAT credit was admissible was submitted by the revenue. Thereafter a fourth and last opportunity was granted to the petitioner on 15.12.2017, however, there was no appearance on behalf of the petitioner. 14. On behalf of the revenue it was contended before the Settlement Commission that the cenvat credit was not admissible as the petitioner had apparently availed it beyond one year in contravention of the proviso to rule 4(7) of the Cenvat Credit Rules, 2004. Further the petitioner had not submitted the documents despite repeated reminders and therefore the department is not in a position to verify the claim. The representative of the revenue however, could not state with certainty that the report dated 22.11.2017 had been provided to the petitioner. The Settlement Commission, therefore, directed the revenue to provide a copy of the report to the petitioner which was provided on 18.12.2017. 15. In response thereto, the petitioner appears to have made submissions vide email dated 27.12.2017 stating that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s before the Settlement Commission can be said to be in the form of conciliation and it gives an opportunity to the assessee to approach the Settlement Commission by submitting application and accepting the liability by disclosing true and correct facts which are necessary for the purpose of determination of amount of tax / demand of tax. As per example show cause notice is issued with respect to evasion of A amount and the assessee / noticee approaches the Settlement Commission accepting the liability to the extent of B amount by declaring true and correct facts, on payment of the amount of B amount with interest, in that case, the Settlement Commission is required to adjudicate the dispute with respect to the balance amount i.e. amount A-B (A minus B) and for which the Settlement Commission is required to follow the procedure as required under section 32F of the Act i.e. to call for the report from the Commissioner and/or Commissioner Vigilance and thereafter after giving an opportunity to the assessee, the entire amount of tax liability is required to be determined by the Settlement Commission. However, the Settlement Commission has no power, authority or jurisdiction to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It also noticed that the Revenue had given reasons to substantiate its position regarding the investigation as well as quantification of duty liability to such a situation, the Settlement Commission thought it appropriate, particularly when the applicants had not made a full and true disclosure and that complex questions of fact, which required appreciation of evidence, were required to be settled through adjudication. (ii) This principle was reiterated also in the case of Australian Foods Ltd. v. Commissioner of Central Excise, Chennai II [2010 (254) ELT 392 (Mad). From this Section, it is seen that the assessee may approach the Settlement Commission, before adjudication to settle the case, disclosing his duty liability which has not been disclosed by him before the Central Excise Officer. But, it nowhere provides that the assessee could approach the Settlement Commission, regarding a disputed question, particularly regarding a disputed question of fact and law as to the applicability of a provision of law, like the one in hand wherein the issue centres around the applicability of whether Section 4 or Section 4-A of the Central Excise Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 30.10.2017, the revenue informed the Settlement Commission that the petitioner had not furnished any details as requested by them. Thereafter a report dated 21.11.2017 (signed on 22.11.2017) was received by the Settlement Commission referring to rule 4 of the Cenvat Credit Rules, 2004 and submitting that there was a legal bar to availing cenvat credit. Thereafter on 15.12.2017, the Settlement Commission directed the revenue to furnish a copy of the report dated 22.11.2017 to the petitioner and directed the petitioner to give its reply. A copy of the report was furnished to the petitioner on 18.12.2017. The petitioner gave its reply by email dated 27.12.2017. The Settlement Commission, however, has taken the non appearance on the part of the petitioner when opportunities of hearing were granted prior to the report having been furnished to it for the purpose of holding that there was non-cooperation on the part of the petitioner. In the opinion of this court, having regard to the sequence of events and the fact that the copy of the report dated 22.11.2017 submitted by the Joint Commissioner as regards the admissibility of Cenvat credit having been furnished to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for settlement under section 32E in relation to any other matter. In the opinion of this court, if the Settlement Commission was of the opinion that considering the nature of the dispute raised before it, the matter was required to be remitted to the adjudicating authority, it should have done so in the exercise of powers under section 32F(5) of the Act which empowers it to pass such orders on the application as it thinks fit. In this regard reference may be made to the decision of the Delhi High Court in Shree Flavours LLP v. Government of India, 2008 SCC OnLine Del 10266, wherein it has been held that powers of the Settlement Commission under section 32F(5) of the Act are so broad so as to confer the Settlement Commission with wide powers. Such orders would include the orders to refer the matter back to the adjudicating authority where the Settlement Commission feels that the dispute involves a mixed question of fact and law and is unable to decide the factual disputes between the parties owing to the technical nature of the disputes. 19. In the light of the discussion, the petition partly succeeds and is accordingly allowed to the following extent. The impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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