2014 (3) TMI 1160 - Commission - Service Tax

Settlement application rejected under Section 32E - Central Excise Act; late filings not compliant.

The settlement application filed by M/s. A.G. Technologies Pvt. Ltd. was rejected as not admissible under Section 32E of the Central Excise Act, 1944, as ... Maintainability of Settlement Commission application - Service Tax returns was not filed in time - Benefit of belated filing of ST-3 returns - Section 32E of the Central Excise Act, 1944 - Manpower Recruitment Agency and Management Consultancy services - levy of service tax - difference of opinion - majority order. HELD THAT:- It is observed that the applicant had not filed the prescribed ST-3 returns consequent to obtaining registration with the Service Tax Department. The returns for the entire disputed period were filed only on 14th March, 2013, after investigations regarding alleged tax evasion had started. Filing of such [late] tax returns cannot be termed, as filing ‘in the prescribed manner’ under Section 32E, in terms of various judgements/orders The payment of late fee for belated filing of Service Tax returns, even though prescribed under Section 70 of the Finance Act read with Rule 7C of the Service Tax Rules, 1994, it does not alter the basic character of the tax return filed i.e. late tax return. It is only that the penal liability initiated under Section, abates in … an event. The ST-3 returns filed late, therefore, do not fulfill the basic condition under Section 32E(1) of the Central Excise Act, 1944, that the applicant has filed returns in the prescribed manner. The application filed by the applicant is, therefore, liable to be rejected. In view of the majority decision of the Member, Shri A.K. Prasad and the Vice-Chairman, Shri Vineet Kumar, holding that the present application filed by M/s. A.G. Technologies Pvt. Ltd. is not admissible under Section 32E of the Central Excise Act, 1944, as made applicable to Service Tax, the same is rejected. Issues Involved:1. Admissibility of the settlement application under Section 32E of the Central Excise Act, 1944.2. Filing of Service Tax returns in the prescribed manner.3. Payment of late fees for delayed filing of returns.4. Compliance with the conditions of Section 32E(1) of the Central Excise Act, 1944.Issue-wise Detailed Analysis:1. Admissibility of the Settlement Application:The core issue was whether the applicant's settlement application was admissible under Section 32E of the Central Excise Act, 1944, as applicable to Service Tax. The applicant had not filed the required ST-3 returns for the period 2007-08 to 2011-12 until after investigations had begun. The Bench had to determine if these late filings met the statutory requirements for filing 'in the prescribed manner.'2. Filing of Service Tax Returns in the Prescribed Manner:The applicant argued that, although the returns were filed late, they were regularized by paying the prescribed late fees under Rule 7C of the Service Tax Rules, 1994. However, the Bench noted that the prescribed manner for filing returns is outlined in Rule 7, requiring half-yearly returns to be filed by the 25th of the month following the half-year. The applicants filed these returns only after the initiation of investigations, which does not comply with the prescribed manner.3. Payment of Late Fees for Delayed Filing of Returns:The applicant contended that the late filing of returns, regularized by paying late fees under Rule 7C, should be considered compliance with the statutory requirements. The Bench, however, held that Rule 7C is merely a mechanism to regularize late filings and does not equate to filing returns in the prescribed manner. Thus, the late returns filed after the initiation of investigations cannot be considered as fulfilling the statutory requirement.4. Compliance with the Conditions of Section 32E(1) of the Central Excise Act, 1944:The Bench emphasized that for a settlement application to be admissible, the applicant must have filed returns showing production, clearance, and duty paid in the prescribed manner. The applicant's late filings, made after investigations had begun, did not meet this requirement. The Bench referred to multiple judicial precedents, including the Delhi High Court's decision in the case of Icon Industries and the Larger Bench decision in Emerson Electric Co. India P. Ltd., which supported the view that late filings do not satisfy the statutory requirement.Separate Judgments Delivered:- Majority Decision (Shri A.K. Prasad and Vice-Chairman Shri Vineet Kumar): The application was dismissed as not maintainable. They held that the applicant did not meet the conditions of Section 32E(1) due to the late filing of returns after the initiation of investigations.- Dissenting Opinion (Shri J.P. Gregory): He opined that the late filings, regularized by paying the prescribed fees under Rule 7C, should be considered as compliance with the statutory requirements, making the applicant eligible for settlement.Final Order:In view of the majority decision, the application filed by M/s. A.G. Technologies Pvt. Ltd. was rejected as not admissible under Section 32E of the Central Excise Act, 1944, as made applicable to Service Tax.