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TMI Blog2010 (7) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... he could export ready-made garments worth ₹ 2.80 crores. Petitioner executed bank guarantee for an amount of ₹ 30 lakhs. Though the petitioner faced shortage of working capital and approached the bank and financiers, he could not arrange for the additional working capital. (c) Petitioner started a private limited Company under the name and style of M/s. Perfect Stitch Garments Private Ltd. in September, 2001 along with one P. Elango to take over the petitioner s business. Even after taking over, the business could not be continued to fulfil the export obligation. The EPCG licence period was also extended up to 19-8-2005. The petitioner resigned from the Board of Directors and allowed one Raj Guru to join in his place to run the Company. Petitioner continued as a holder of 50% share in the new company. (d) The third respondent investigated the performance of the Company in September, 2004 and issued a show cause notice on 31-12-2004 to the petitioner in his capacity as proprietor of M/s. Muthuraman Exports and M/s. Perfect Stitch Garments Private Limited. The show cause notice alleged violation of the conditions of EPCG licence for having deployed one machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terated his contention that the liability would be only ₹ 17,11,165/- and requested the first respondent to settle the issue by fixing the liability at ₹ 17,11,165/-. The same having been rejected and the first respondent permitted the revenue to adjudicate the matter in terms of Section 127C(1) of the Customs Act, 1962, stating that there is want of full and true disclosure, the petitioner has filed this writ petition with the above said prayer. 3. The respondents have filed counter affidavit by stating that based on the investigation conducted, the statements recorded and the documents produced, the show cause notice was issued on 31-12-2004 under Section 124 of the Customs Act, 1962, calling upon the petitioner to show cause as to why, - (i) the benefit of zero duty exemption extended on the capital goods valued at ₹ 80,34,368/-, imported by them under EPCG Licence No. 04500575, dated 17-8-99 should not be denied as they failed to fulfil the condition of import of capital goods worth minimum ₹ 1 crore within the stipulated period; (ii) duty of ₹ 29,32,363/- (as per annexure to SCN) should not be demanded together with interest @ 15% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication for settlement with direction to come for adjudication. There is no illegality in the said order as the petitioner is not willing to pay the said revised amount. 4. The learned counsel for the petitioner submitted that in cases where there is discrepancy in the amount payable, the Settlement Commission can adjudicate the matter and arrive at a correct figure. 5. The learned counsel for the respondents submitted that there is no full and true disclosure in the settlement application filed by the petitioner and unless and until there is full and true disclosure, the settlement application before the Commission is not maintainable as per the judgment of the Division Bench of this Court, which was rendered considering the rejection of settlement claim under Section 245D of the Income-tax Act, 1961. 6. I have considered the rival submissions of the learned counsel for the petitioner as well as the learned Senior Standing Counsel for the respondents. 7. The point for consideration in this writ petition is whether the application filed for settlement without full and true disclosure on the part of the petitioner is entertainable and the first respondent has got any pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclosed the correct amount in the settlement application due to any reason. 12. In the decision reported in 2010 (253) E.L.T. 722 (Mad.) (Optigrab International v. Government of India) the Division Bench of this Court considered the very same provision and held that full and true disclosure is a mandatory requirement. In Paragraph 26 it is held thus, - 26. Chapter XIVA of the Customs Act, being an exemption to the normal procedure contemplated under the Act and occurring in a fiscal statute, has to be necessarily construed strictly, in our considered view, the scope of the proceedings cannot be unduly enlarged. In cases where there was no deliberate or intended desire on the part of importer to evade or avoid payment of customs duty, to provide immunity and protection of such class of people, Legislature has incorporated Chapter XIVA. As a matter of fact, Chapter XIVA was introduced by Parliament by relying on similar provisions under the Income-tax Act with a view to introduce remedial measure by way of Settlement Commission, such provision cannot be interpreted to enlarge the scope of settlement where there was deliberate evasion of duty. Cases of misdeclaration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the Settlement Commission under Section 127C of the Customs Act, 1962, and upheld the same. In Para 4 it is held thus, 4. ........... The statute has bestowed Settlement Commission with discretionary powers and if such powers have been exercised diligently and reasonably, the same cannot be faulted with. Each order of settlement is based on the facts and circumstances of each case which may be peculiar to itself and, therefore, cannot be made the basis for terming an order discriminatory unless violative of the Statute. 16. In an income-tax matter similar issue arose before this Court in 2009 (310) ITR 0010 : (2008) 1 MLJ 214 = 2013 (298) E.L.T. 353 (Del.) (Commissioner of Income-tax v. Income-tax Settlement Commission) and a Division Bench of this Court, wherein I was also a party, upheld the order of the Settlement Commission, which was passed under Section 245D of the Income-tax Act, 1961, on the ground that voluntary disclosure made by the assessee was not in terms of Section 245C of the Income-tax Act, 1961, and allowed the assessee to face the normal channels of assessment/appeals, etc. In the said judgment, the Division Bench relied on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isrepresentation of facts, it cannot be said that there was true and fair disclosure. It was noted here that unlike Section 139 of the Act which provides for filing of revised return, there is no provision for revision of an application made in terms of Section 245C. That shows clear legislative intent that the applicant for settlement has to make a true and fair declaration from the threshold. It is on the basis of the application received that the Commission calls for report to decide whether the application is to be rejected or permitted to be continued. The declaration contemplated in Section 245C is in the nature of voluntary disclosure of concealed income, but as noted above it must be true and fair disclosure. Voluntary disclosure and making a full and true disclosure of the income are necessary preconditions for invoking the Commission s jurisdiction. (Emphasis Supplied) 17. Same is the view taken by the Division Bench in the decision reported in 2008 (306) ITR 0403 [Dr. C.M.K. Reddy v. Settlement Commission (IT/WT)] under Section 245C of the Income-tax Act, 1961. 18. Applying the above cited judgments to the facts of this case and as the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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