2009 (4) TMI 89 - SC - Central Excise

At the time of the assessee s application coming up for admission before the Settlement Commission application was allowed subject to outcome of investigation to be ordered by Commission - counter claim filed by the assessee was to be verified with reference to the facts and evidence on record Without undertaking that exercise of verification the Settlement Commission passed a final order confirming the demand - impugned judgment of the High Court as well as the order of the Settlement Commission is set aside - Commission is directed to undertake the above exercise and dispose of the matter in accordance with law

Summary

Issues:
1. Verification of counter claim before issuance of Show Cause Notice by Settlement Commission.
2. Final order confirmation of demand by Settlement Commission without proper verification.
3. Setting aside of High Court judgment and Settlement Commission order.
4. Direction to Settlement Commission to undertake verification exercise and dispose of the matter in accordance with law.

Analysis:
The Supreme Court judgment pertained to a case where the Settlement Commission passed an order without verifying the counter claim filed by the assessee, leading to the confirmation of a demand by the Department. The Court noted that the Settlement Commission failed to undertake the necessary verification exercise before passing a final order. Consequently, the Court set aside the impugned judgment of the High Court and the order of the Settlement Commission. The Court directed the Settlement Commission to conduct the verification exercise with reference to the facts and evidence on record before issuing a Show Cause Notice. The Commission was instructed to dispose of the matter in accordance with the law, emphasizing the importance of due process and fair opportunity for the assessee to present their case.

The Court highlighted the procedural irregularity in the Settlement Commission's actions and emphasized the need for a thorough examination of the counter claim before confirming any demand. The judgment underscored the significance of adherence to legal procedures and principles of natural justice in tax matters. Additionally, the Court suggested that if the Settlement Commission decides to adjudicate upon the demand, the assessee must be given a fair opportunity to present their case effectively. The Court also mentioned the possibility of remanding the matter to the Adjudicating Authority in accordance with the provisions of the Central Excise Act, 1944, if deemed necessary by the Settlement Commission.

In conclusion, the Supreme Court disposed of the appeal with no order as to costs, highlighting the importance of procedural fairness and adherence to legal requirements in settlement proceedings. The judgment serves as a reminder of the significance of due process and proper verification procedures in tax-related matters, ensuring that all parties involved have a fair chance to present their case and address any claims effectively.