2021 (10) TMI 233 - HC - Service Tax

Court quashes part of orders, remits for fresh consideration. Costs awarded.

The Court partially allowed the writ petition, quashing the impugned part of the orders and remitting the matter back to the Settlement Commission for ... Validity of order of settlement commission whereas service tax liability has been settled at a certain sum with interest and penalty - petitioner discharged service tax liability @50% instead of @100% and balance 50% of the service tax paid by the service provider - manpower services - double taxation - HELD THAT:- RCM was changed to 100% qua the consumer w.e.f. 01.04.2015; however, inadvertently, the Assessee continued to pay 50% and the service provider paid the remaining 50%; thus, whatever is due to ceaser has reached his hands, is true; in fact, the CBEC vide Circular No. 341/18/2004 had clarified that the reverse charge mechanism should not lead to double taxation; in other words, once the tax liability is discharged regardless of the persons who discharge, the Assessee cannot be asked to pay the tax again. the Settlement Commission has to keep in mind the recommendation of The Wanchoo Committee that if the tax payer takes the initiative and voluntarily discloses the facts of his alleged deviations to their full extent, he should not be subjected to criminal proceedings and that pecuniary settlement should put the matter to rest. The High Courts of Bombay, Gujrat and Punjab & Haryana have taken the view that when the duty paid character and receipt are not in doubt, the credit cannot be denied relying upon procedural rules - reliance can be placed in the case of COMMISSIONER OF C. EX. & CUS., VADODARA-II VERSUS STEELCO GUJARAT LTD. [2010 (2) TMI 307 - GUJARAT HIGH COURT]. When there was no dispute as to receipt of the inputs/services or the genuineness of the claim, the Settlement Commission could not have refused to admit the photostat copies of the documents; petitioners are ready & willing to produce the originals of the invoices and therefore, the matter requires remittance for fresh consideration. The matter is remitted to the Settlement Commission for consideration afresh - petition allowed by way of remand. Issues:Challenge to order of Settlement Commission regarding service tax liability, interest, penalty, and immunity under Section 32K of Central Excise Act, 1944.Analysis:The petitioners, a Pvt. Ltd. Company and its Director, approached the Writ Court to challenge the order issued by the Settlement Commission regarding service tax liability, interest, penalty, and immunity under Section 32K of the Central Excise Act, 1944. The petitioners contested only two issues that resulted in additional tax liability, interest, and penalties imposed on them. The Senior Panel Counsel representing the respondents vehemently opposed the Writ Petition, arguing that the scope of interference by the Court is limited. The Counsel sought dismissal of the petition, justifying the impugned order.The Court, after hearing arguments from both sides and examining the case papers, decided to grant limited indulgence in the matter. The Court acknowledged the disclosure made by the Assessee and the payment of a significant sum towards the tax liability. It also considered the change in the ratio of tax payment between the consumer and the service provider over time. The Court noted that the Assessee had inadvertently continued to pay only 50% of the tax due, while the service provider paid the remaining 50%. The Court referred to statutory provisions related to the Settlement Commission and emphasized the objective of providing relief to tax evaders through speedy settlement of tax dues.Furthermore, the Court referred to a CBEC Circular and decisions from High Courts of Bombay, Gujarat, and Punjab & Haryana regarding tax payment and credit denial. The Court observed that when there is no dispute about the receipt of inputs/services or the genuineness of the claim, the Settlement Commission cannot refuse to admit relevant documents. As a result, the Court partially allowed the writ petition, quashing the impugned part of the orders and remitting the matter back to the Settlement Commission for fresh consideration in accordance with the law and after notice to stakeholders. All contentions were kept open, and costs were awarded in favor of the petitioners.