2019 (3) TMI 1737 - Commission - Service Tax

Application for Settlement of dispute - Section 32E of the Central Excise Act of 1944 read with Section 83 of the Finance Act, 1994 - it is alleged that the applicant were engaged in evasion of Service Tax, during the period 2012-13 to 2016-17 by way of not discharging applicable Service Tax liability against taxable services provided by them to their clients - HELD THAT - As per the provisions of proviso (d) of Section 32F(1) of the Central Excise Act, no settlement application shall be filed unless the applicant has paid the additional amount of service tax accepted by him along with the interest. Keeping in view of the fact that the applicant has not submitted the entire bunch of verifiable challans evidencing payment of Service Tax as claimed by him and the evidences for adjustment of certain amount of Cenvat credit under the RCM against the admitted liability, the Bench notes that the applicant has failed to pay the admitted tax liability of ₹ 1,92,18,792/- and therefore the said application is liable to be rejected as non-maintainable. The Commission, therefore, is of the considered view that the applicant has not complied with the requirement of proviso (d) of Section 32E(1) of the Central Excise Act, 1944, as applicable to Service Tax matters - The Commission further notes that as the main application is treated as non-maintainable, the application of the co-applicant is also held to be non-maintainable. The Bench rejects the applications of the applicant as well as of the co-applicant as inadmissible and non-maintainable.

Issues Involved:
1. Evasion of Service Tax
2. Settlement of Service Tax Liability
3. Admissibility of Settlement Application
4. Exemption Claims under Notification No. 25/2012-S.T.
5. Payment Verification and Cenvat Credit Adjustment
6. Compliance with Section 32E(1) of the Central Excise Act

Detailed Analysis:

1. Evasion of Service Tax:
The applicant company was accused of evading Service Tax from 2012-13 to 2016-17 by not discharging applicable liabilities for services such as Works Contract Service, Management, Maintenance and Repairs, Erection, Commissioning and Installation, and Consulting Engineering Services. The investigation revealed that the company failed to submit ST-3 returns from 2012-13 onwards and suppressed relevant details in the returns filed.

2. Settlement of Service Tax Liability:
The applicant admitted to a Service Tax liability of ?1,92,18,792 and deposited ?90,42,257 along with ?3,43,000 as interest. The applicant sought to settle the case by admitting additional liability and claiming to have made full and true disclosure. However, the applicant later expressed the intention to withdraw the settlement application.

3. Admissibility of Settlement Application:
The Bench noted that under Section 32E(4) of the Central Excise Act, an application for settlement cannot be withdrawn. The applicant's failure to attend the personal hearing and provide verifiable evidence of payment led the Bench to scrutinize the available records and reject the application as inadmissible and non-maintainable.

4. Exemption Claims under Notification No. 25/2012-S.T.:
The applicant claimed exemptions for services rendered to Indian Railways, private parties, and WBREDA. The Department contended that the exemptions were only applicable to 'original works' for the railways and not for services like Annual Maintenance Contracts (AMC) or Erection, Commissioning, and Installation services. The Department provided evidence that these services were taxable and the applicant's claims for exemptions were invalid.

5. Payment Verification and Cenvat Credit Adjustment:
The applicant claimed to have paid ?1,24,58,107 towards the admitted liability and sought to adjust ?67,60,685 against Cenvat credit under Reverse Charge Mechanism (RCM). However, the Department verified only ?93,86,257 of the claimed payments and found no evidence to support the Cenvat credit adjustment. The lack of verifiable evidence led to the conclusion that the applicant had not fulfilled the payment requirements.

6. Compliance with Section 32E(1) of the Central Excise Act:
The Bench observed that the applicant failed to comply with the proviso (d) of Section 32E(1) of the Central Excise Act, which mandates the payment of the additional amount of Service Tax accepted by the applicant along with interest. The applicant's inability to provide verifiable evidence of payment and Cenvat credit adjustment rendered the application non-maintainable.

Conclusion:
The Settlement Commission rejected the applications of both the applicant and the co-applicant as inadmissible and non-maintainable due to non-compliance with legal provisions and lack of verifiable evidence. The jurisdictional Commissioner was directed to implement the order and take appropriate action as per the law.

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