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TMI Blog2019 (9) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... y are that the first petitioner is a company, inter alia, engaged in the business of providing hospitality services to its customers, including short term accommodation, restaurant services, outdoor catering services etc. 4.1 It is the case of the petitioner that a search was conducted by the officers of the service tax department on the premises of the first petitioner company on 16.3.2015, on the basis of information received that the petitioner company has evaded service tax liabilities. Pursuant to the search, it was alleged that the first petitioner company has evaded payment of service tax to the tune of approximately Rs. 5,26,90,101/- for the period from 1st October, 2014 to 30th June, 2015. 4.2 It is the case of the petitioner that pursuant to the inquiry, it had paid an amount of Rs. 3,75,07,537/- as payment towards the aforesaid tax liability. Subsequently, 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to submit necessary Cenvat documents before the Principal Commissioner, Service Tax and also directed the Principal Commissioner to file a verification report on admissibility of Cenvat credit within three weeks of receiving the documents. 4.6 It is the case of the petitioner that pursuant to the said directions, the petitioner company submitted the Cenvat register along with supporting documents before the Principal Commissioner by a letter dated 26th June, 2017 and issued intimation of the same to the second respondent by an email dated 29th June, 2017. The petitioner company also submitted the original invoices as well as balance details for Cenvat credit through letters dated 1st August, 2017, 13th August, 2017 and 31st August, 2017. 4.7 It is the case 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming the availability of Cenvat credit to the petitioner company was already in the custody of the Settlement Commission since 4th October, 2017, despite which the same was handed over by the revenue department only in th month of November, 2017. 4.11 It is further the case of the petitioner that it was under a reasonable belief that in the light of the report dated 6th September, 2017, the Settlement Commission would pass appropriate orders permitting the petitioner to utilize the Cenvat credits as well as waive the penalty to be imposed on the petitioner; however, when the matter proceeded for hearing on 15th December, 2017, the representative of the revenue department submitted before the Settlement Commission 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 appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that in fact, as per the record of the proceedings dated 5th October, 2017, the department stated that it is still verifying the aspect of CENVAT admissibility. 5.2 It was submitted that upon declaring the admissibility of CENVAT credit to be a disputed question, the Settlement Commission ought to have referred the case back to the concerned adjudicating authority under section 32F(5) of the Act, which provides wide powers to the Settlement Commission to pass any order as it deems fit. 5.3 With respect to non-cooperation on the ground of nonappearance, it was submitted that non-appearance of the petitioner 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e report dated 9.6.2017 of the Additional Commissioner, Service Tax Ahmedabad inter alia stating that it is established that the assessee has been charging and collecting service tax from their customers/clients; however, it has not deposited the same in the Government account since many years and that the assessee has failed to avail input service tax credit as per CCR 2004 within stipulated time limit and also not filed ST-3 returns. It was submitted that the petitioner not remaining present is not the basis on which the impugned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings before the appropriate authority. 8. Insofar as the first ground for sending the matter back to the adjudicating authority is concerned, on behalf of the petitioner it has been contended that mere non appearance on some dates would not amount to non-cooperation. To bolster such submission reliance was placed upon the decision of the Andhra Pradesh High Court in Anil Re-rolling Mills v. The Commissioner of Central Excise, 2014 SSC OnLine Hyd 728, wherein it has been held that 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 cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2017, the revenue submitted that details of payments made by the petitioner to their input service providers had been called for but the petitioner had not furnished such details. By a letter dated 21.11.2017 the Joint Commissioner submitted a report referring to rule 4 of the Cenvat Credit Rules, 2004 stating that there was a legal bar in availing Cenvat credit after one year of the 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, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation proceedings is concerned, considering the provisions of the Act more particularly Section of Chapter V of the Act, by no stretch of imagination it can be said that the proceedings before the learned Settlement Commission is an alternate to adjudication proceedings. The proceedings 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the applicants had not accepted a substantial part of the duty liability and had in fact contested the evidence collected by the Revenue as being fabricated and tampered with. 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 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Commissioner that the earlier report dated 6.9.2017 was only an interim report. Thereafter, vide letter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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