SERVICE TAX (SETTLEMENT OF CASES) RULES, 2012 – AN OVERVIEW.

[Mr. M. GOVINDARAJAN]

                        Section 94(2)(j) of Finance Act, 1994 gives power to the Central Government, by notification in the official gazette, make rules to provide for the settlement of cases, in accordance with Sections 31, 32, and 32A to 32P (both inclusive) in Chapter V of the Central Excise Act, 1944 as made applicable to service tax vide Section 83.

                        The Customs and Central Excise Settlement Commission is also having jurisdiction in settlement of cases in service tax matters. 

• Section 32A of Central Excise Act. 1944 deals with the jurisdiction and powers of Settlement Commission;
• Section 32 B provides that the Vice Chairman will act as Chairman or to discharge his functions in certain circumstances;
• Section 32C  deals with the power of Chairman to transfer cases from one bench to other;
• Section 32D provides that the decision of settlement commission will be by majority;
• Section 32E  deals with the application  for settlement of cases;
• Section 32F deals with the procedure on receipt of application under Section 32E;
• Section 32G deals with the power of Settlement Commission to order provisional attachment to protect revenue;
• Section 32H deals with the power of Settlement Commission to reopen completed proceedings;
• Section 32 I deals with powers and procedure of Settlement Commission;
• Section 32J deals with inspection etc., of the reports;
• Section  32K deals with the power of Settlement Commission to grant immunity from prosecution and penalty;
• Section 32L deals with the power of Settlement Commission to send a case back to the Central Excise Officer;
• Section 32 M provides that the order of Settlement Commission will be conclusive;
• Section 32 N provides of recovery of sum due under order of settlement;
• Section 32 O provides ban for subsequent application for settlement in certain cases;
• Section 32 P provides that the proceedings before Settlement Commission to be judicial proceedings.

The Central Government, in exercise of the powers conferred by Section 94(2)(j) of Finance Act, 1994 made the ‘Service Tax (Settlement of cases) Rules, 2012 vide Notification No. 16/2012-Service tax, dated 29^th May, 2012. 

                        An application for settlement of cases in respect of service tax shall be made in Form SC (ST-1).  The application should be verified and all relevant documents accompanying the application shall be signed-

-          In case of an individual by the individual himself or where the individual is absent from India, by the individual concerned or by some person duly authorized by him in this behalf and where the individual is a minor or is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf;

-          In the case of a HUF, by the Karta of such family and where the Karta is absent from India or is mentally incapacitated from attending to his affairs, by the senior most adult member of the family available;

-          In case of a company or local authority, by the principal officer thereof;

-          In case of a firm, by any partner thereof, not being a minor;

-          In case of any other association, by any member of the association or the principal thereof; and

-          In case of any other person, by that person or some person competent to act on his behalf;

Every application shall be filed in quintuplicate and shall be accompanied by a fee of Rs.1000/-.  The application fee should be credited in a branch of the authorized bank or a branch of the State Bank of India or a branch of RBI and the triplicate copy of the challan sent to the Settlement Commission with the application.  No payment other than this mode will be accepted by the Settlement Commission.

                        The following information is required to be furnished in Form SC (ST-1)-

• Details of show cause notice including period of dispute and service tax demanded in the notice;
• Dispute in connection with which the application for settlement is made;
• Adjudicating Authority before whom the notice is pending adjudication;
• Details of service tax returns filed for the period of the dispute and the invoices of taxable services entered in the books of accounts;  Self attested copies of relevant service tax returns and extracts from books of accounts/register is to be enclosed along with the application;
• Brief facts of the case and particulars of the issues to be settled and terms of settlement sought by the applicant;
• Detailed calculations for the accepted service tax as payable for settlement and interest on the said admitted service tax;
• Payment of the service tax along with interest arrived at as above;
• Details of any application for settlement filed before the Settlement Commission, if any;
• Details of the order debarring the applicant from making further application for settlement by any bench of the Settlement Commission;
• Details of order Settlement Commission making the order as void by any Benches of the Settlement Commission.

The additional amount of service tax accepted by the applicant along with interest due thereon, shall be deposited in any of the authorized bank under TR-6 in quintuplicate or G.A.R.7 and the same shall be disclosed by him in the form. 

                        On  receipt of the application the Settlement Commission shall call for a report from the Commissioner of Central Excise having jurisdiction or Commissioner of Service Tax having jurisdiction by sending a copy of the application along with the annexure to the application and the statement and other documents accompanying such annexure.    If the Settlement Commission orders attachment of property shall send a copy of such order to the Commissioner of Central Excise or Commissioner of Service Tax having jurisdiction over the place in which the applicant owns any moveable or immovable property or resides or carries on his business or has his bank account.  On receipt of the attachment order the Commissioner may authorize any officer subordinate to him and not below the rank of an Assistant Commissioner of Central Excise or Service Tax to take steps to attach such property of the applicant.  The authorized officer shall prepare an inventory of the property attached and specify in it, in the case of immovable property, the description of such property sufficient to identify it and in case of the movable property, the place where such property is lodged or kept and shall hand over a copy of the same to the applicant or to the person from whose charge the property is attached.   The authorized officer shall send a copy of the inventory so prepared each to the Commissioner of Central Excise and the Settlement Commission.

                        Rule 6 prescribes fee for copies of report.   Any person, who makes an application for obtaining copies of reports made by any Central Excise Officer, shall pay a fee of Rs.5/- per page of each report or part thereof.