2015 (9) TMI 830 - Commission - Service Tax

Settlement of cases - Admissible of application for settlement - Construction of residential complex service - sale of residential flats in their newly constructed Residential Complex to the prospective buyers - period from 1-7-2010 to 30-9-2011 - Held that - It is observed that because of uncertainty about the taxability of the said service during the relevant period, the applicant failed to obtain registration and file ST-3 Returns in the prescribed manner which was an essential condition for the admissibility of an application under Section 32-E Proviso (a) of the Central Excise Act, 1944. The Bench observes that adequate circumstances existed for non-filing of the returns in the present case as the entire issue of taxability, of construction of residential complex service was before the Hon ble Bombay High Court. Therefore, taking cue from the spirit of the said amendment of Section 32E of the Central Excise Act, 1944 with effect from 6-8-14, the Bench takes a pragmatic view and considers the subject application admissible even though it was filed prior to the subject amendment. The Bench observes that the applicant have discharged the entire tax liability of ₹ 41,72,645/- as demanded in the SCN along with interest. They have co-operated with the investigation and in the proceedings before this Commission. Accordingly, the application filed by the applicant is settled in terms of the following order passed under sub-Section (5) of Section 32-E of the Central Excise Act, 1944 as made applicable to Service Tax vide Section 83 of the Finance Act, 1994. - The Service Tax payable in this case is settled at ₹ 41,72,645/-. The Bench imposes a penalty of ₹ 1,00,000/- (Rupees one lac only) on the applicant for the violations as alleged in the SCN. Immunity is granted to the applicant from payment of penalty in excess of the said amount. - immunity granted from prosecution .

Issues Involved:
1. Non-payment of Service Tax.
2. Failure to file prescribed returns.
3. Imposition of penalty under various sections of the Finance Act, 1994.
4. Admissibility of the application under Section 32E of the Central Excise Act, 1944.
5. Grant of immunity from penalty and prosecution.

Detailed Analysis:

1. Non-payment of Service Tax:
The applicant, M/s. Aishwaryam Ventures, Pune, engaged in providing "Construction of Residential Complex Service," failed to pay Service Tax for the period from July 1, 2010, to September 30, 2011. The Service Tax liability amounted to Rs. 41,72,645/-. The applicant paid this amount only after the initiation of an investigation by the department in September 2011. The applicant argued that the taxability of the service was under dispute during the relevant period, leading to delayed payment.

2. Failure to File Prescribed Returns:
The applicant did not file the prescribed ST-3 Returns until the time of the department's enquiry. The returns were eventually filed on February 4, 2012, after the investigation started. The Revenue argued that the non-payment and non-filing of returns would have gone unnoticed but for the department's detection.

3. Imposition of Penalty:
The Show Cause Notice (SCN) issued on July 25, 2013, proposed the imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994, for various contraventions, including failure to pay Service Tax, failure to furnish returns, and suppression of facts. The applicant requested immunity from penalties, citing judicial precedents where penalties were not imposed when the tax and interest were paid voluntarily before the issuance of the SCN.

4. Admissibility of the Application under Section 32E:
The applicant's application for settlement was initially questioned due to non-filing of returns in the prescribed manner, a condition under Section 32E of the Central Excise Act, 1944. However, an amendment to Section 32E effective from August 6, 2014, allowed the Settlement Commission to admit applications even if returns were not filed, provided adequate reasons existed. The Commission considered the uncertainty about the taxability of the service during the relevant period as an adequate reason and admitted the application.

5. Grant of Immunity from Penalty and Prosecution:
The Commission settled the Service Tax liability at Rs. 41,72,645/- and interest at Rs. 3,57,313/-, both of which were already paid by the applicant. A penalty of Rs. 1,00,000/- was imposed for the violations, with immunity granted from payment of any additional penalty. The applicant was also granted immunity from prosecution under the Act, subject to the payment of the penalty within 30 days.

Order:
- Service Tax: Settled at Rs. 41,72,645/-, already paid.
- Interest: Settled at Rs. 3,57,313/-, already paid.
- Penalty: Rs. 1,00,000/- to be paid within 30 days.
- Prosecution: Immunity granted subject to payment of the above dues.

The order emphasized that the immunities are granted under Section 32K(1) of the Act, and the settlement would be void if obtained by fraud or misrepresentation of facts. Copies of the order were provided to the applicant and the Jurisdictional Commissioner for implementation.

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