2021 (6) TMI 908 - HC - Service Tax

Court emphasizes full disclosure in settlement applications, refers case back for lack of cooperation

M/s. Diksat Transworld Limited Versus The Commissioner of Service Tax-II, The Customs, Central Excise & Service Tax Settlement Commission, Chennai

The Court upheld Final Order No.27 of 2017-ST issued by the Settlement Commission, emphasizing the requirement of full and true disclosure by the ... Rejection of application before Settlement Commission - true declarations made by the petitioner or not - non-payment of service tax on broadcasting services and sale of space or time for advertisement services - HELD THAT:- In the present case, there is a clear finding that the petitioner has not cooperated for the adjudication only in the event of true and clear declaration. Settlement can be made and even an iota of doubt in respect of the declaration could be sufficient to send the matter back to the adjudicating authority. The provision as stated in Section 32E of the Central Excise Act, 1944, would clearly reveal that a person approaching the Settlement Commission must establish that the application contains full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction. Thus, an approach to the Commission must be not only genuine, it must be proved that the application contains the true and full disclosure of duty liability, which has not been disclosed before the Central Excise Officer concerned - In the absence of an element of truthfulness in the application, the Commission is liable to reject the application in limini and send the matter back to the adjudicating authority by invoking Section 32L of the Act. This being the scope of consideration by the Settlement Commission, the findings of the Settlement Commission are of paramount importance for the purpose of considering this writ petition. The findings of the Settlement Commission reveal that the petitioner has not approached with clean hands. The show cause notice was issued for non-payment of service tax on broadcasting services and sale of space or time for advertisement services. Once a dispute is raised and the petitioner approached the Settlement Commission, without furnishing full and true disclosures, then there is no reason whatsoever for the Commission to entertain the application for settlement and thus, the writ petitioner is not entitled for settlement by invoking the provisions of the Act. The provisions for settlement are provided in a statute enabling the aggrieved person to come out with true facts and settle the issue peacefully to avoid prolongation and protraction of disputes. Thus, the settlement provisions are made for the welfare of the assessees and the said provisions are to be implemented in its spirit and the provisions for settlement cannot be dealt with reference to the disputes, if any, exist between the parties - this Court has no hesitation in arriving a conclusion that the petitioner has not established any acceptable reasons for the purpose of interfering with the order passed by the Settlement Commission. Petition dismissed. Issues:Challenge to Final Order of Customs, Central Excise & Service Tax Settlement Commission.Analysis:The petitioner challenged Final Order No.27 of 2017-ST issued by the Settlement Commission. The petitioner contended that despite true declarations and an acknowledgment of discharge, the case was reopened by the Commission. The respondents argued that under Section 32L of the Act, lack of cooperation allows the Commission to send the case back to the adjudicating authority. The Commission found that the petitioner did not cooperate fully and had doubts about the declaration's accuracy. The Commission emphasized it is not an adjudicating authority but a forum for settlement as per legal precedents.The Court analyzed the provisions of Section 32E of the Act, emphasizing the requirement of full and true disclosure by the applicant. Lack of truthfulness in the application can lead to rejection and referral back to the adjudicating authority under Section 32L. The Settlement Commission's findings are crucial in such cases. The Court noted that the petitioner did not approach with clean hands, as the application was made after a show cause notice was issued. The Commission found the issues too complex for settlement due to divergent claims and lack of cooperation from the petitioner.The Settlement Commission's findings highlighted the need for adjudication by the jurisdictional officer due to disputed facts and laws. The Court held that settlement is not a right but a provision for peaceful resolution, contingent on truthful disclosure. As the Commission deemed the case unsuitable for settlement, the Court upheld the impugned order, confirming Final Order No.27 of 2017-ST. The petitioner failed to provide acceptable reasons for challenging the Commission's decision, leading to the dismissal of the writ petition without costs.