2017 (11) TMI 1787 - Commission - Service Tax

Settlement Commission rejects application by Elixir Enterprises for non-disclosure of tax liability.

IN RE : ELIXIR ENTERPRISES & HOTELS PVT. LTD.

IN RE : ELIXIR ENTERPRISES & HOTELS PVT. LTD. - 2018 (364) E.L.T. 785 (Sett. Comm.) Issues Involved:1. Payment and non-remittance of service tax.2. Failure to file ST-3 returns.3. Applicability of Section 32-O of the Central Excise Act, 1944.4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.5. Maintainability of the application before the Settlement Commission.Issue-wise Detailed Analysis:1. Payment and Non-remittance of Service Tax:The applicant, a hotel industry entity, was found to have charged and collected service tax but failed to remit the same to the government for the period from October 2012 to August 2014. The service tax payable was determined to be Rs. 6,23,72,019/-. The applicant admitted and paid a portion of this liability amounting to Rs. 4,45,36,366/- along with interest of Rs. 2,23,04,354/-.2. Failure to File ST-3 Returns:The applicant had not filed ST-3 returns for the periods subsequent to September 2012, which was a violation of the service tax regulations. This non-compliance led to the issuance of the show cause notice demanding the unpaid service tax along with interest and proposing penalties.3. Applicability of Section 32-O of the Central Excise Act, 1944:The applicant had previously filed an application for settlement which was resolved with a penalty of Rs. 15,00,000/-. The current application was challenged on the grounds of Section 32-O, which bars subsequent applications if a penalty was imposed for concealment of duty liability. The applicant argued that the penalty was not for concealment, relying on a precedent from the Allahabad High Court. However, the Bench noted that the previous penalty was indeed for suppression of facts, making the current application non-maintainable under Section 32-O.4. Imposition of Penalties under Sections 76, 77, and 78 of the Finance Act, 1994:The show cause notice proposed penalties under Sections 76, 77, and 78 due to the applicant’s failure to pay service tax and file returns. The Bench found that the applicant had collected service tax but not remitted it, justifying the imposition of penalties. The applicant's plea for leniency and waiver of penalties was not accepted due to the nature of the violations.5. Maintainability of the Application before the Settlement Commission:The Bench examined whether the application was maintainable considering the provisions of Section 32-O. Given the previous penalty for concealment of service tax liability, the Bench concluded that the current application was barred under Section 32-O. Additionally, the applicant’s partial admission of liability and request for time to pay the remaining amount did not meet the requirement for a true and full disclosure, further rendering the application non-maintainable.Findings and Decision of the Bench:The Bench determined that the application was hit by the bar under Section 32-O due to the previous penalty for suppression of facts. The application was also non-maintainable due to the applicant’s failure to make a true and full disclosure of their service tax liability. Consequently, the application was rejected as non-maintainable.Order:The application filed by M/s. Elixir Enterprises & Hotels Pvt. Limited was rejected as non-maintainable. A copy of the order was to be provided to the applicants and the jurisdictional Commissioner for implementation purposes.