2018 (3) TMI 1381 - HC - Central Excise

Immunity from payment of penalty - Held that - In the instant case, after being satisfied that the respondent-company had made a full and correct disclosure of the tax liability, the settlement commission decided to grant immunity from payment of penalty in excess of Rupees Ten Lakhs - Since we do not find any jurisdictional error in the order of the settlement commission so as to interfere with the same, the petition is liable to be dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to the order of the Customs, Central Excise and Service Tax Settlement Commission reducing interest rate and granting immunity from penalty.
2. Applicability of interest rate on tax liability.
3. Granting immunity from penalty without recording reasons.

Analysis:
1. The petitioner challenged the Settlement Commission's order reducing interest rate and granting immunity from penalty exceeding Rupees Ten Lakhs. The respondent-company applied for settlement after a show cause notice for service tax. The Commission accepted the interest liability based on the company's disclosure, imposed a penalty of Rupees Ten Lakhs, and granted immunity from excess penalty. The petitioner contested the interest rate calculation and lack of reasons for reducing the penalty.

2. The petitioner argued that interest on tax liability should follow notification No.12/2014ST, not the default date's rate. The Settlement Commission's reliance on a judgment from Andhra Pradesh was disputed. The respondent defended the Commission's decision, citing judgments stating limited interference with Settlement Commission orders. The High Court found no grounds to interfere, upholding the Commission's reliance on the default date's interest rate for calculating liability.

3. Regarding the penalty, the Settlement Commission's discretion to grant immunity is governed by Section 32K of the Central Excise Act, 1944. The Commission granted partial immunity exceeding Rupees Ten Lakhs due to the company's financial hardship and cooperation during proceedings. The High Court emphasized that Settlement Commission decisions are not adjudicatory but settlement-based, hence not requiring detailed reasons for granting immunity. As no jurisdictional error was found, the petition was dismissed, and no costs were awarded.