2019 (10) TMI 686 - HC - Central Excise

Rejection of Settlement Application - non-cooperation as understood by the Settlement Commission - HELD THAT - The Settlement Commission could not have held against the petitioner company on the ground that despite receiving all the Annexures sought by it, it was dragging its feet. In this regard, we may also note that the finding of the Settlement Commission that there was non-cooperation on the part of the petitioner company is not in keeping with the law laid down by a Division Bench of the High Court for the States of Telangana and Andhra Pradesh in ANIL RE-ROLLING MILLS V/s. COMMISSIONER OF CENTRAL EXCISE 2015 (7) TMI 751 - ANDHRA PRADESH HIGH COURT . Therein, the Division Bench observed that the expression cooperation in the context of adjudication by the Settlement Commission would mean true and full disclosure of the facts pertaining to the assessee and non-cooperation would mean the opposite of it. The failure to submit its response and that too when the material sought by the petitioner company had not been provided to it would not amount to non-cooperation as understood by the Settlement Commission. The order dated 16.03.2018 passed by the Settlement Commission non-suiting the petitioner company on the ground of such non-cooperation therefore cannot be countenanced. The writ petition is accordingly allowed setting aside the order passed by the Settlement Commission and remitting the matter to it for consideration afresh.

Summary

Issues: Challenge to order of Customs, Central Excise and Service Tax Settlement Commission rejecting application under Section 32 L of Central Excise Act, 1944 made applicable to Service Tax.

Analysis:
1. The writ petition challenged the order dated 16.03.2018 passed by the Settlement Commission, Additional Bench, Chennai, rejecting the petitioner company's application under Section 32 L of the Central Excise Act, 1944, applicable to Service Tax under Section 83 of the Finance Act, 1994.

2. The impugned order reflected that despite providing most Annexures sought by the petitioner company, the Settlement Commission rejected the application due to alleged non-cooperation for more than three months, which the petitioner disputed.

3. Counsel for the petitioner informed the Court that out of 17 Annexures sought, only 10 were provided, disputing the Commission's claim of delay. The petitioner argued against the assumption of delay in submitting responses leading to non-suiting.

4. The Revenue's counsel mentioned that out of the remaining 7 Annexures, 2 were located and provided, with efforts ongoing to find the rest, indicating ongoing cooperation from their end.

5. The Court noted that the Settlement Commission's finding of non-cooperation was not in line with the legal standard set by a Division Bench in a previous case, defining cooperation as full disclosure of facts and non-cooperation as the opposite.

6. The Court held that failure to respond when all material was not provided did not amount to non-cooperation as understood by the Settlement Commission, leading to the order's rejection being deemed unacceptable.

7. Consequently, the writ petition was allowed, setting aside the Commission's order and remanding the matter for fresh consideration. The petitioner was directed to respond within three weeks of receiving the remaining Annexures. If any document remained untraceable, the Commission was to proceed with adjudication after notifying the petitioner and granting sufficient time for response. Pending petitions were closed without costs.