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2018 (7) TMI 184 - HC - Service TaxRejection of settlement application - demand of service tax and eligible of Cenvat Credit - The impugned order is primarily passed on the basis of the fact that there was no proper explanation from the petitioner qua his claims. They did not produce requisite documents in support of settlement inspite of requisition being sent to them - Held that - In the present case, respondent no.2 proceeded on interim report of revenue and before receipt of final report, the impugned order was passed. In pursuant to order dated 13th April, 2017, passed by Settlement Commission allowing application under Section 32E to be proceeded with, it was expected that respondent no.2 would look into all material aspects by giving sufficient opportunity to assessee to establish his claim in the application. For any inaction on the part of Revenue to submit Final Verification Report, the petitioners cannot be made to suffer. To ascertain the correct position in the matter, respondent no.2 could have granted the petitioner and the Jurisdictional Revenue Authority further hearing. It would be appropriate to remand the proceedings back to respondent no.2 for fresh consideration by setting aside the impugned order - Appeal allowed by way of remand.
Issues Involved:
1. Legality of the Settlement Commission's order rejecting the application under Section 32E(1) of the Central Excise Act, 1944. 2. Adequacy of documents submitted by the petitioner. 3. Compliance with procedural requirements and principles of natural justice. Detailed Analysis: 1. Legality of the Settlement Commission's Order: The petitioner challenged the Settlement Commission's order dated 21st August 2017, which rejected their application as not maintainable under Section 32E(1) of the Central Excise Act, 1944. The petitioner, a proprietary concern providing hydraulic cranes on hire, had been served a show-cause notice demanding service tax amounting to ?1,88,23,722/- for the period 2008-09 to 2012-13. The petitioner had already paid ?1,03,88,821/- and filed ST-3 returns prior to the notice. The petitioner sought settlement before the Settlement Commission, which was rejected on the grounds of non-submission of requisite documents. 2. Adequacy of Documents Submitted by the Petitioner: The petitioner submitted calculation sheets, copies of challans evidencing payment of service tax with interest, invoices on which CENVAT Credit was availed, and ST-3 Returns. They contended that there was an error in the amounts shown due to an error in the ST-3 Returns. The Settlement Commission, however, found discrepancies in the application and noted that the petitioner had not filed ST-3 Returns for the financial year 2008-09 and had not paid the late fee for belatedly filed returns. Despite the petitioner’s submission of documents via a letter dated 19th May 2017, the Commission relied on an Interim Report from the Jurisdictional Revenue Authorities, which pointed out discrepancies and stated that the eligibility of CENVAT Credit could not be verified without the CENVAT register. 3. Compliance with Procedural Requirements and Principles of Natural Justice: The petitioner argued that the Settlement Commission's order suffered from non-application of mind and that they were not given sufficient opportunity to submit relevant documents. They claimed that the documents were sufficient for settlement and that the show-cause notice had verified the CENVAT Credit. The petitioner also contended that the Interim Report was sent without providing them an opportunity to submit documents and that the discrepancies were adequately explained. The respondents argued that sufficient opportunity was given, but the petitioner failed to respond adequately. The Court noted that the Settlement Commission had hurriedly rejected the application without giving sufficient opportunity to the petitioner and had not properly considered the petitioner’s reply dated 30th June 2017. Conclusion: The Court found that the Settlement Commission had not given the petitioner sufficient opportunity to submit documents and had not properly considered the petitioner’s explanations. The impugned order was set aside, and the matter was remanded back to the Settlement Commission for fresh consideration. The Court directed the Commission to reconsider the Settlement Application after giving the parties an opportunity to be heard and to decide the application in accordance with law, without being influenced by the previous order. Order: (i) Rule is made absolute in terms of prayer clause (a). (ii) The impugned order dated 21st August 2017 is set aside, and the respondent no. 2 is directed to reconsider the Settlement Application after giving opportunity to the parties concerned and after hearing them. (iii) The Settlement Application shall be decided in accordance with law, without being influenced by this or the earlier order dated 21st August 2017. (iv) Parties are allowed to call upon or rely upon any documents in connection with the Settlement Application. (v) Writ Petition stands disposed of.
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