2018 (9) TMI 1715 - Commission - Service Tax

Settlement application rejected for untimely filing under Central Excise Act

IN RE: EMTA COAL LTD.

The Settlement Commission rejected the settlement application as it was not filed 'before adjudication' under Section 32E(1) of the Central Excise Act, ... Application before Settlement Commission - maintainability of adjudication order - Section 32E(1) of the Central Excise Act, 1944 - the Commissionerate had held that the adjudication order was passed prior to filing of the settlement application and accordingly, it is not maintainable under Section 32E(1) of the Central Excise Act, 1944 - Mining Services - It is alleged that the applicant was not discharging their Service Tax Liability on the Mining of Mineral, Oil or Gas Services even though they are registered for the above services - whether the settlement application is maintainable under Section 32E(1) of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994, i.e. a valid application for settlement under Section 32E(1)? Held that:- From the contents of Section 32E(1), it is clear that an assessee can make an application for settlement “before adjudication” - The expression “before adjudication” appearing in Section 32E of the Central Excise Act, 1944, has been explained by the Hon'ble High Court of Judicature at Hyderabad in M/S. CONCRETE CONSTRUCTIONS VERSUS THE UNION OF INDIA [2017 (5) TMI 98 - ANDHRA PRADESH HIGH COURT], where it was held that the term “before adjudication” as contained in Section 32E(1) refers to the adjudication by the competent authority bearing a date. The assessee has to file the settlement application before that date. In the present case, there was no adjudication pending before the authority as on 23-6-2017. The adjudication upon disposal had been dispatched on 21-6-2017. In other words, on 23-6-2017 i.e. the date on which the settlement application was received, there was no adjudication pending. Hence the question of invoking provisions of Section 32E of the Central Excise Act, 1944, does not arise - In this case, the adjudication order was passed on 21-6-2017 with dated signature of the adjudicating authority, Commissioner, Service Tax, and was despatched on that day i.e. 21-6-2017. Therefore, the application for settlement filed on 23-6-2017 is not maintainable before the Settlement Commission under Section 32E(1) of the Central Excise Act, 1944. The Commission finds that the case in respect of the present application has been filed after adjudication. Thus, this case does not fall within the meaning of “case” as defined in clause (c) of Section 31 of the Central Excise Act, 1944 - the present application is not maintainable and hence rejected. Issues Involved:1. Service Tax Liability on Mining Services2. Admissibility of Settlement Application under Section 32E(1) of the Central Excise Act, 1944Issue 1: Service Tax Liability on Mining ServicesThe applicant, a Limited Company engaged in providing Mining Services, was alleged to have not discharged their Service Tax liability on Mining of Mineral, Oil, or Gas Services despite being registered for these services. The premises were searched, and incriminating records were recovered. The Department issued two Show Cause Notices (SCNs) demanding Service Tax amounting to Rs. 1,54,88,28,983/- and Rs. 1,97,54,37,566/- respectively for the periods 1-7-2012 to 31-12-2013 and 1-1-2013 to 31-3-2015. The applicant admitted an additional liability of Rs. 5,95,358/- and paid the same before approaching the Settlement Commission.Issue 2: Admissibility of Settlement Application under Section 32E(1) of the Central Excise Act, 1944The applicant filed a settlement application on 23-6-2017, claiming they were unaware of the adjudication order passed on 21-6-2017, which they received on 24-6-2017. The Department argued that since the adjudication order was passed and dispatched on 21-6-2017, the settlement application was not maintainable under Section 32E(1), which requires the application to be made 'before adjudication.'Detailed Analysis:Service Tax Liability on Mining Services:The applicant provided Mining Services to Joint Venture Companies (JVCs) with various Government-owned Power utilities. The services included activities such as Removal of Top-Soil, Extraction of Coal, Crushing, Screening, and Transportation of coal. These activities were classifiable under Mining Services and chargeable to Service Tax under Section 66B of the Act. The Department alleged that the applicant failed to discharge their Service Tax liability, leading to the issuance of two SCNs demanding a total of Rs. 352,42,66,549/-. The applicant admitted a minor portion of the liability and paid Rs. 5,95,358/- along with interest before filing the settlement application.Admissibility of Settlement Application:The key issue was whether the settlement application filed on 23-6-2017 was maintainable under Section 32E(1) of the Central Excise Act, 1944, which allows an application 'before adjudication.' The Commission examined the timeline and found that the adjudication order was signed and dispatched on 21-6-2017, and received by the applicant on 24-6-2017. The Commission referred to several judgments, including the Hon'ble High Court of Judicature at Hyderabad, which clarified that 'before adjudication' means before the date of the adjudication order, not the date of receipt.The Commission concluded that since the adjudication order was passed and dispatched on 21-6-2017, the settlement application filed on 23-6-2017 was not maintainable. The application was thus rejected as it did not meet the requirement of being filed 'before adjudication.'Conclusion:The Settlement Commission rejected the application for settlement on the grounds that it was not filed 'before adjudication' as required under Section 32E(1) of the Central Excise Act, 1944. The adjudication order was passed and dispatched on 21-6-2017, making the application filed on 23-6-2017 invalid.