2017 (11) TMI 1787 - Commission - Service Tax

Maintainability of Settlement commission application - applicability of bar under Section 32-O of the Central Excise Act, 1944 - time bar - Non-payment of service tax - the applicant had been charging and collecting service tax but not remitting the same to the Government - applicant is engaged in activities in the nature of Hotel Industry under the brand name The Chancery Pavillion - applicant also engaged in providing Restaurant Service, accommodation services, banquet halls, etc. - non-payment of service tax and non-filing of returns for the period subsequent to September 2012 - demand of service tax under Proviso to Section 73(1) of the Finance Act, 1994 along with appropriate interest u/s 75 of the Act, ibid and penalty u/s 76, 77 and 78 of FA - Held that - Persual of the provisions of section 32-O clearly indicate that any subsequent application by an applicant is barred if any penalty has been imposed on them on account of concealment of duty/tax liability from the jurisdictional officers. The Bench observes that in the earlier show cause notice, penalty was proposed under Section 78 of the Finance Act, 1994 on the applicant on grounds of suppression of facts, with an intent to evade payment of Service Tax and accordingly vide Final Order No. 46/2014-S.T., dated 20-10-2014, a penalty of ₹ 15,00,000/- was imposed on the applicant under the provisions invoked in the Notice - the amendment by insertion of explanation to Section 32-O is to emphasize that the concealment of particulars of duty liability related to concealment made from the Officer of Central Excise and not from the Settlement Commission. However, in the case of the applicant the earlier order was passed on 21-10-2014 after the amendment of Section 32-O was made clarifying that once penalty is imposed on the applicant for any concealment made from the Central Excise Officer, then the bar of subsequent application under Section 32-O would apply. The Bench notes that in respect of the application relating to the Final Order No. 46/2014-S.T., dated 21-10-2014, the SCN has been issued invoking suppression of facts on the part of the applicant. Accordingly, a penalty of ₹ 15 lakhs was imposed on the applicant under the provisions invoked in the Notice including Section 78 of the Finance Act which tantamounts to imposition of penalty for concealment of Service tax liability before the jurisdictional Officer. The Bench also finds that the applicant has accepted their Service tax liability only for a part of the period (April 2013 to Aug 2014) covered by the show cause notice and claimed that the balance demand pertaining to the previous period Oct 2012 to March 2013 is time barred. The Jurisdictional Commissioner has rightly pointed out that the show cause notice has been issued well within the due date of 25-10-2014 viz. on 10-10-2014 (within 18 months from the relevant date viz. 25-4-2013), being the due date for filing ST3 Return for the period (October 2012-March 2013) - the Bench holds that the applicant has not made a true and full disclosure of their liability before the Commission which is a pre-requisite for entertaining the application. In any case, as observed by the Bench supra, the application is not maintainable as it is hit by the bar imposed under Section 32-O of the Central Excise Act, 1944 and is liable for rejection. The Bench, accordingly, holds that the application filed by the applicant, is clearly hit by the bar in terms of express provisions of Section 32-O of the Central Excise Act, 1944 as well as non-maintainable in the absence of true and full disclosure of their additional Service Tax liability as required under Section 32E(1) of the Central Excise Act, 1944 as made applicable to Service Tax matters under Section 83 of the Finance Act, 1994. The application filed by M/s. Elixir Enterprises & Hotels Pvt. Limited, Bangalore-560025 is rejected as non-maintainable.

Summary

Issues Involved:
1. Payment and non-remittance of service tax.
2. Failure to file ST-3 returns.
3. Applicability of Section 32-O of the Central Excise Act, 1944.
4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
5. Maintainability of the application before the Settlement Commission.

Issue-wise Detailed Analysis:

1. Payment and Non-remittance of Service Tax:
The applicant, a hotel industry entity, was found to have charged and collected service tax but failed to remit the same to the government for the period from October 2012 to August 2014. The service tax payable was determined to be ?6,23,72,019/-. The applicant admitted and paid a portion of this liability amounting to ?4,45,36,366/- along with interest of ?2,23,04,354/-.

2. Failure to File ST-3 Returns:
The applicant had not filed ST-3 returns for the periods subsequent to September 2012, which was a violation of the service tax regulations. This non-compliance led to the issuance of the show cause notice demanding the unpaid service tax along with interest and proposing penalties.

3. Applicability of Section 32-O of the Central Excise Act, 1944:
The applicant had previously filed an application for settlement which was resolved with a penalty of ?15,00,000/-. The current application was challenged on the grounds of Section 32-O, which bars subsequent applications if a penalty was imposed for concealment of duty liability. The applicant argued that the penalty was not for concealment, relying on a precedent from the Allahabad High Court. However, the Bench noted that the previous penalty was indeed for suppression of facts, making the current application non-maintainable under Section 32-O.

4. Imposition of Penalties under Sections 76, 77, and 78 of the Finance Act, 1994:
The show cause notice proposed penalties under Sections 76, 77, and 78 due to the applicant’s failure to pay service tax and file returns. The Bench found that the applicant had collected service tax but not remitted it, justifying the imposition of penalties. The applicant's plea for leniency and waiver of penalties was not accepted due to the nature of the violations.

5. Maintainability of the Application before the Settlement Commission:
The Bench examined whether the application was maintainable considering the provisions of Section 32-O. Given the previous penalty for concealment of service tax liability, the Bench concluded that the current application was barred under Section 32-O. Additionally, the applicant’s partial admission of liability and request for time to pay the remaining amount did not meet the requirement for a true and full disclosure, further rendering the application non-maintainable.

Findings and Decision of the Bench:
The Bench determined that the application was hit by the bar under Section 32-O due to the previous penalty for suppression of facts. The application was also non-maintainable due to the applicant’s failure to make a true and full disclosure of their service tax liability. Consequently, the application was rejected as non-maintainable.

Order:
The application filed by M/s. Elixir Enterprises & Hotels Pvt. Limited was rejected as non-maintainable. A copy of the order was to be provided to the applicants and the jurisdictional Commissioner for implementation purposes.