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2017 (8) TMI 1516 - Commission - Service TaxMaintainability of application before Settlement Commission - Security Agency Services - short-payment of service tax during the period of 2010-11 to 2014-15 in spite of collection of Service Tax from their clients - Section 14 of the Central Excise Act 1944 read with Section 83 of the FA 1994 - extended period of limitation - Held that - Bench notes that the application was filed by the applicant on 10-3-2017 and the order-in-original was also dispatched on the same day i.e. 10-3-2017 - As per provisions of Section 32E as made applicable to Service Tax matters vide Section 83 of the Finance Act 1994 an assessee may make an application in respect of a case to settlement commission before adjudication of case. An order of adjudication is made on the date on which adjudicating authority dispatched it to the assesse - The SCN in question was adjudicated on 10-3-2017 when the order was dispatched by speed post. The settlement application was also filed on 10-3-2017 when the case is already adjudicated. In this case application filed upto 9-10-2017 can be considered as filed before adjudication. The application is not maintainable in terms of Section 32E(1) of the Central Excise Act 1944 and the same is liable to be rejected on this ground alone without going into the merits of the case.
Issues Involved:
1. Evasion of Service Tax by M/s. Vishal Security Force (VSF). 2. Calculation of Service Tax liability. 3. Admissibility of exemption for services to educational institutions. 4. Payment of interest on unpaid Service Tax. 5. Maintainability of the settlement application post-adjudication. Issue-Wise Detailed Analysis: 1. Evasion of Service Tax by M/s. Vishal Security Force (VSF): M/s. VSF was engaged in providing security agency services and was duly registered for Service Tax. Investigations revealed that VSF collected Service Tax from clients but failed to remit the full amount to the government for the period 2010-11 to 2014-15. The Service Tax payable was ?1,17,76,183/-, but only ?64,50,356/- was paid. Further calculations showed a liability of ?4,25,55,151/-, with an unpaid amount of ?2,96,69,047/- as of 11-2-2016. 2. Calculation of Service Tax liability: VSF disputed the method of calculating Service Tax based on higher figures from the Balance Sheet and Form 26AS, arguing it should be based solely on Balance Sheet figures after accounting for bad debts. They also claimed the correct liability was ?3,44,92,387/- instead of ?4,25,55,151/-. They paid ?3,37,19,561/- in cash and ?7,72,826/- via Cenvat credit, totaling ?3,44,92,387/-. 3. Admissibility of exemption for services to educational institutions: VSF argued that services to educational institutions were exempt from Service Tax under Notification No. 25/2012-S.T., effective from 1st July 2012. The department extended this exemption only from 11-7-2014, which VSF contested, claiming it should apply from 1-7-2012. 4. Payment of interest on unpaid Service Tax: The department calculated interest at varying rates, while VSF contended it should be a consistent 18% as per the rate at the time of default. VSF calculated interest liability at ?1,20,05,774/- and paid an additional ?29,98,285/- towards differential interest. 5. Maintainability of the settlement application post-adjudication: Revenue reported that the case was adjudicated by Order-in-Original No. 62/ST-V/SKD/16-17, dated 21-2-2017, dispatched on 10-3-2017, the same day VSF filed their settlement application. As per Section 32E of the Central Excise Act, 1944, an application must be filed before adjudication. The Settlement Commission, referencing the Bombay High Court's decision in M/s. Vishnu Steels v. Union of India, held that the application was not maintainable as it was filed after the adjudication order was dispatched. Conclusion: The Settlement Commission rejected the application by M/s. Vishal Security Force as not maintainable under Section 32E(1) of the Central Excise Act, 1944, due to the timing of the application post-adjudication. The Commission emphasized that the application should have been filed before the adjudication order was dispatched.
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