2017 (11) TMI 837 - HC - Service Tax

Immunities granted under the Order No.18/2014-ST dated 28.3.2014 - Section 32K of the Act - Held that - this Court is of the opinion that it is not open to the Respondent-Commissioner of Central Excise and Service Tax to himself treat the order of Settlement Commission as non est because, in his opinion, the condition of granting immunity under the said order by payment of service tax dues to the extent of 2.19 crore was not satisfied. If at all factually the said Commissioner held such a view, the only course open to him was to approach the Settlement Commission by way of a suitable Miscellaneous Application with the relevant facts, whereupon the Settlement Commission, after giving an opportunity of hearing to the Petitioner could arrive at its own appropriate conclusions and pass appropriate fresh orders. The Petitioner and the Commissioner of Central Excise and Service Tax only being the rival parties before the said Settlement Commission could not undo the effect of the order passed by the Settlement Commission at their own level and therefore, it was incumbent for the Respondent Commissioner of Central Excise and Service Tax to have approached the Settlement Commission seeking a modification or review of the order passed by the Settlement Commission. The Petitioner was also required to be given an opportunity of hearing by the Settlement Commission in this regard. This petition is accordingly disposed of by directing both the parties to appear before the Settlement Commission again where the Respondent Commissioner of Central Excise and Service Tax - The Settlement Commission, after giving appropriate opportunity of hearing to the Petitioner, may pass appropriate orders in accordance with law - Petition allowed by way of remand.

Summary

Issues:
Challenge to impugned order withdrawing immunities granted by Settlement Commission under Central Excise Act and Finance Act, 1994.

Analysis:
The petitioner challenged the impugned order dated 21.11.2016 passed by the Commissioner of Central Excise and Service Tax, withdrawing immunities granted under Order No.18/2014-ST dated 28.3.2014 by the Settlement Commission. The Settlement Commission had settled the case by directing the petitioner to pay a specific amount of Service Tax within a stipulated time, granting immunity from prosecution under Section 32K of Central Excise Act. The petitioner made representations showing payments made for satisfaction of conditions imposed by the Settlement Commission. However, the impugned order withdrew immunities, stating that the petitioner did not comply with the conditions, as some payments were made for periods falling after 2011-2012. The Commissioner imposed penalties and confirmed demand for non-compliance with Service Tax rules.

The Additional Solicitor General argued that only payments for the period covered by the Settlement Commission's order were considered compliant, while subsequent payments were not. The petitioner contended that all payments were made within the covered period. The Court held that the Commissioner could not unilaterally treat the Settlement Commission's order as non-existent based on his opinion of non-compliance. If the Commissioner believed non-compliance occurred, he should have approached the Settlement Commission for review, providing both parties an opportunity to present their case.

The Court directed both parties to reappear before the Settlement Commission for the Commissioner to seek a review or modification of the Settlement Commission's order. The Settlement Commission was tasked to pass appropriate orders after giving the petitioner an opportunity to be heard. The parties were scheduled to appear before the Settlement Commission on a specified date, allowing six months for the Settlement Commission to pass orders. Contempt proceedings against the Commissioner were dropped. The petition was disposed of with no costs.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, and the Court's decision to refer the matter back to the Settlement Commission for review and appropriate action.