2015 (8) TMI 1432 - Commission - Service Tax

Cleaning Activity Services - application to Settlement Commission - the applicant appears to have suppressed the facts of providing services to their clients and collection of service tax from them. It also appears that the applicant have willfully suppressed the facts of non-payment of service tax despite having collected the same from their clients, which they were duty bound to deposit with the Central Government - proviso to sub-section (1) of Section 73 of the Finance Act, 1994 - maintainability of application. Held that - the applicants have already been penalized in the past for concealment of their tax particulars, the present application filed on 19-1-2015 is clearly not admissible under the provisions of Section 32-O(1)(i) of the Central Excise Act, 1944. It is seen that in the present application the taxability of services provided to units in the SEZ is an issue whereas it was not an issue in the earlier 2 applications already settled by the Mumbai and Delhi Benches of the Settlement Commission - In the present case they have been penalized by the Settlement Commission Benches of Mumbai and Delhi in their Final Orders dated 25-8-2014 and 22-7-2014, respectively, and since the present application, relating to the Pune Unit, has been filed on 19-1-2015, the same is clearly not admissible under Section 32-O(1)(i) of the Central Excise Act, 1944, as made applicable to Service Tax. The Settlement application filed by the applicant, M/s. CLR Services Pvt. Ltd. in respect of their Pune Unit is rejected as inadmissible under Section 32-O(1)(i) of the Central Excise Act, 1944 as made applicable to Service Tax by virtue of Section 83 of the Finance Act, 1994.

Summary

Issues Involved:
1. Suppression of taxable value and non-payment of service tax.
2. Failure to register for service tax at all operational locations.
3. Incorrect filing of service tax returns.
4. Non-payment of service tax for services provided to SEZ units.
5. Admissibility of the settlement application under Section 32-O(1)(i) of the Central Excise Act, 1944.

Detailed Analysis:

1. Suppression of Taxable Value and Non-Payment of Service Tax:
The applicant, M/s. CLR Services Pvt. Ltd., was engaged in providing various services and had registered for service tax under the category of "Cleaning Activity Service." An intelligence report revealed that the applicant had suppressed their taxable value and discharged service tax on an understated value collected from customers. Investigations showed that service tax was collected but not deposited with the government. The applicant admitted to a liability of Rs. 4,36,10,091/- and interest of Rs. 20,00,000/-, which they had failed to deposit due to financial crises.

2. Failure to Register for Service Tax at All Operational Locations:
The applicant had multiple operational locations but had not registered for service tax at all these locations. Specifically, the Hyderabad branch was unregistered. The investigation revealed that while the applicant had registered for service tax at Pune, Bangalore, Delhi, and Mumbai, they had not done so for Hyderabad, leading to non-compliance with service tax regulations.

3. Incorrect Filing of Service Tax Returns:
The applicant filed service tax returns (S.T.-3) for the Pune branch only, and the returns were found to be understated compared to the actual taxable value billed and recovered from clients. The applicant failed to file returns for other registered locations and understated the taxable value in the returns filed, leading to a significant discrepancy between the declared and actual taxable amounts.

4. Non-Payment of Service Tax for Services Provided to SEZ Units:
The applicant provided services to SEZ clients without charging service tax, claiming exemption. However, during the period from 3-3-2009 to 19-6-2009, the exemption was available by way of refund, meaning service tax had to be paid initially and then refunded. The applicant did not comply with this procedure, resulting in a demand of Rs. 2,47,513/- for the service tax on services provided to SEZ units during this period.

5. Admissibility of the Settlement Application Under Section 32-O(1)(i):
The applicant had previously approached the Settlement Commission for their Mumbai and Delhi units, where penalties were imposed for concealment of service tax liability. The current application for the Pune unit was filed without disclosing these previous settlements. According to Section 32-O(1)(i) of the Central Excise Act, 1944, an applicant penalized for concealment of tax particulars cannot apply for settlement in any other matter. The Bench found that the applicant's argument that the Pune unit should be considered separately was not valid, as the legal entity (the company) had already been penalized. Consequently, the application was deemed inadmissible.

Conclusion:
The Settlement Commission rejected the application filed by M/s. CLR Services Pvt. Ltd. for their Pune unit as inadmissible under Section 32-O(1)(i) of the Central Excise Act, 1944. The applicant's failure to disclose previous penalties and the ongoing issue of non-payment of service tax for services provided to SEZ units contributed to this decision. The Bench emphasized that the legal entity, having been penalized previously, could not file subsequent settlement applications for different units.