Service tax which is an indirect tax is no more far from us. We all pay Service tax on services received. The scope has been widened by introduction of negative list and presently almost all services are covered under the tax provisions.
Like, direct tax, indirect taxes Central Excise, Custom Law and Service tax have commission for settlement of cases. The body constituted is “Customs, Central Excise and Service Tax Settlement Commission.” Upto Finance Act, 2014, the name of the Commission was “Customs and Central Excise Settlement Commission”.
PURPOSE OF SETTLEMENT COMMISSION
The Settlement Commission is constituted for settling complicated cases of chronic tax evaders as an extraordinary measure by giving an opportunity for true confession and to settle the matters finally. The forum is created for self surrender by tax evaders. It can’t be used for challenging the legality of assessment order.
The object of Settlement Commission is to open the doors for settlement. It is created to see that protracted proceedings before various authorities / courts are avoided and resort is made for settlement of cases. It is a beneficial statue.
CONSTITUTION OF SETTLEMENT COMMISSION
The Settlement Commission was constituted w.e.f. 9 June, 1999 vide notification no. 40/99-CX (NT) dated 9-6-1999. It consists of Chairman, three Vice Chairmen and eight members functioning under Department of
Revenue, Ministry of Finance. Principal bench is at Delhi and there are also additional benches at Mumbai, Chennai and Kolkata.
The Chairman, Vice Chairmen and other members of the Settlement Commission shall be appointed from amongst persons of integrity and outstanding ability, having special knowledge of, and experience in administration of Customs and Central Excise Laws.
The powers and authority of the Settlement Commission will be exercised by a principal bench sitting at Delhi and additional benches established by the Central Government. Decisions of the Commission will be by majority.
ADVANTAGES OF SETTLEMENT COMMISSION
- Quick and easy settlement of disputes of high revenue stake.
- Tax evader can make clean breast of his affairs.
- It is a chance to turn new leaf by paying taxes with interest and avoid further liabilities.
- Waiver/ reduction of penalty, fine or interest. Immunity from prosecution may also be granted to assessee, its directors and partners.
WHO CAN APPROACH SETTLEMENT COMMISSSION
Any Assessee or any person to whom show cause notice has been issued can file application before Settlement Commission. The case should be pending and amount involved should be more than Rs. 3 lakhs.
Full disclosures should be made by the applicant in form SC (ST)-1. The application should be submitted in quintuplicate properly signed and verified. Application should be accompanied by a fee of Rs. 1000 by way of a TR-6/ GAR-7 challan in authorised bank. Cheques/ drafts are not accepted. The appellant is required to pay duty admitted plus interest. Application once made can’t be withdrawn.
There is no time limit for filing application in case of seizure through the Finance Act, 2014. Earlier no application can be made before expiry of 180 days from the date of seizure.
Full and true disclosure is the very basis of approaching Settlement Commission. An application to Settlement Commission is not intended to enable dishonest assessee to continue his dishonest conduct and still claim benefit of Settlement Commission. If full and true disclosure is not made, then the application will not be taken for any further proceedings.
ADMISSION OF APPLICATION
After the receipt of application, Settlement Commission will issue notice within seven days to explain in writing why the application should be allowed to be proceeded. Within 14 days from date of issuing notice, the Settlement Commission will either allow the application to be proceeded or will reject the application.
Copy of the order will be sent to the applicant and jurisdictional Commissioner. Settlement Commission will call report from jurisdictional Commissioner within seven days from date of order. The Commission will also send copy of the application along with annexures, statements and other documents.
Commission will consider report and grant hearing to parties. Commission must pass order within 9 months from last day of month in which application was made. The period may be extended by further 3 months. Commission will pass the final order and determine the duty, penalty and interest payable.
If final order is not passed within nine/twelve months,
- Settlement proceedings will abate
- Matter will be continued with adjudicating authority.
This is very ‘risky’ situation since the adjudicating authority can make use of all admissions and disclosures made by the assessee before Settlement Commission. This can be used to raise demands and impose penalties.
If order is obtained by fraud or misrepresentation of facts, then the order of the Settlement Commission will be declared void.
POWERS ARE LIMITED
Settlement Commission is a Tribunal with limited powers. It can’t normally act as Court of Enquiry. It can’t review its orders or reopen its concluded proceedings. The Settlement Commission cannot accept application to rectify mistake apparent from records.
It is quite clear that Settlement Commission is a forum of self surrender for service tax evaders and conclusions of the Commission on question of facts and law is final. High Court is permitted only to examine the legality of procedures and not validity of the order passed. The conclusion reached by the Commission can’t be nullified except under very limited circumstances.
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