2016 (12) TMI 167 - HC - Service Tax

Validity of part of the order of settlement commission - Irregular credit taken on ineligible input services - Irregular credit taken on common input services - health and fitness service - business auxillary service - principles of natural justice - Held that - First and foremost what is to be borne in mine is that the petitioner cannot selectively accept the portion of the order passed by the Settlement Commission and dispute correctness of the other portions of the order which in the opinion of the petitioner is not fully favourable. The petitioner had full and effective opportunity before the Commission and it is on their own volition they had approached the Commission and filed an application for settlement of the case. Unless and until the petitioner is able to establish total non-application of mind or perversity in the approach of the Commission or when there is violation of principles of natural justice, the question of examining the correctness of the proceedings of the Commission in exercise of writ petition cannot be made. However, in this writ petition there is no challenge to the impugned order on these grounds. Hence, for the above reasons, the writ petition is liable to be dismissed. Accordingly, the writ petition is dismissed.

Summary

Issues:
Challenge to order passed by Customs, Central Excise and Service Tax Settlement Commission regarding service tax liability and penalty.

Analysis:
The petitioner challenged an order by the Settlement Commission regarding service tax liability and penalty. The petitioner disputed the amount quantified by the Commission for specific serial numbers in the order. The dispute centered around irregular credit taken on ineligible and common input services. The petitioner contended that the Commission erred in applying a re-assessment notification retrospectively and misinterpreted the eligibility of CENVAT credit pre-2011. However, the petitioner cannot selectively accept parts of the Commission's order and challenge others. The Supreme Court precedent highlighted that once an assessee opts for Settlement Commission, they cannot cherry-pick favorable aspects. The High Court emphasized that it won't act as an appellate authority to review Settlement Commission orders. The Court reiterated that factual findings by the Commission are not subject to review by the High Court or Supreme Court. Referring to a previous case, the Court stated that interference with Settlement Commission orders is limited unless there is a clear violation of principles of natural justice or a lack of proper application of mind. As the petitioner had a fair chance to present their case before the Commission and did not raise issues of non-application of mind or procedural errors, the Court dismissed the writ petition without costs.

This detailed analysis of the judgment highlights the key legal principles applied by the High Court in dismissing the petitioner's challenge to the Settlement Commission's order regarding service tax liability and penalty.