2016 (7) TMI 306 - HC - Service Tax

Challenge to the order passed by the Settlement Commission - The only issue which was not decided in favour of the petitioner is with regard to income from SEZ. However, on a perusal of Paragraph 6.10 of the impugned order, it is seen that the claim for exemption for the income of ₹ 81,10,41,888/- from the SEZ units for the year 2011-12 and 2012-13, the Commissioner has referred to a report submitted on 06.04.2016 and came to a conclusion that petitioner has not furnished the exclusive income at the time of investigation and pointed out that it is not possible to furnish the quantum of taxable income received from SEZ units. - The petitioner s case is that they were never put to notice about such a report and had they been informed about the same, they would have definitely conceded to the claim and also paid tax . Held that - On a reading of the impugned order passed by the Settlement Commission, it is evidently clear that this vital opportunity was not granted to the petitioner before the case came to be referred back to the jurisdictional Commissioner for adjudication. The respondents are not in a position to justify the impugned order as procedural error looms large on the face of the impugned proceedings. Therefore, the impugned order to that extent, namely with regard to the income from SEZ, calls for interference. The learned senior counsel appearing for the petitioner informed the Court that after the impugned order was passed and before filing the writ petition, the petitioner has further admitted the liability and paid a sum of ₹ 2,31,12,732/- apart from the payment already made i.e., ₹ 6,10,21,642/-. This aspect of the matter shall also be considered by the Settlement Commission while taking up the case for settlement of issue, viz., Income from SEZ, which has been remanded for consideration. The writ petition is partly allowed and the impugned order is set aside, to insofar as the findings rendered by the Commissioner under the head Income from SEZ and the matter is remanded to the Settlement Commissioner for fresh consideration.

Summary

Issues:
Challenge to order by Customs, Central Excise and Service Tax Settlement Commission dated 20.04.2015 regarding liability for Service Tax on 'Rent-a-cab Scheme Operator Services', specifically income from SEZ units.

Analysis:
The petitioner challenged the Settlement Commission's order dated 20.04.2015, focusing on the liability for Service Tax related to 'Rent-a-cab Scheme Operator Services'. The petitioner admitted liability to a certain extent during the proceedings. However, the main issue arose concerning income from SEZ units. The Settlement Commissioner, in the impugned order, noted that the petitioner failed to furnish exclusive income details from SEZ units, leading to a denial of exemption for a substantial amount. The petitioner argued that they were unaware of a crucial report influencing this decision and would have paid the tax if informed. The Settlement Commission's failure to grant an opportunity for the petitioner to address this issue before referring it back for adjudication was deemed a procedural error.

The Settlement Commission's order lacked justification as the petitioner was not given a chance to present their case before the matter was sent back for adjudication. The procedural error was evident, particularly regarding the income from SEZ units, warranting interference with the impugned order. The petitioner, after the order, admitted further liability and made additional payments. The court partially allowed the writ petition, setting aside the findings on income from SEZ and remanding the matter to the Settlement Commissioner for fresh consideration. The Settlement Commissioner was directed to provide a personal hearing to the petitioner and decide the issue in line with statutory provisions. The findings on other issues were confirmed, allowing settlement based on those determinations. No costs were awarded, and the connected miscellaneous petition was closed.