The concept of Settlement Commission
is fairly new in service tax. It is only in the year 2012, that the benefit of
settlement through settlement commission was extended to the service tax
assesses, which was earlier available under Central Excise and Customs Act.
Legislature has set up settlement commissions to settle the tax disputes to
avoid the lengthy litigation. The Settlement commission save a huge sum of
amount spent on litigation plus it helps in speedy recovery of tax. So it’s a
win-win situation for both government and assessee.
Vide Finance Act, 2012, the
provisions of Settlement Commission provided under Central Excise Act, 1944
have been made applicable to Service Tax cases by including the said provisions
of Central Excise Act, 1944 under Section 83 of the Finance Act, 1994.
Therefore, Settlement of cases under service tax is governed by provisions specified
under Central Excise Act.
Q. No. 1 – What is settlement
commission.
Settlement Commission has been
constituted under Section 32 of the Central Excise Act, 1944. It was
established in year 1999 vide Notification No.40/99-CE (NT) & 41/99-CE (NT)
dated 09.06.1999.
Q. No. 2 – Basic objective of
Settlement Commission.
The basic objectives of setting up
of the Settlement Commission are:-
(i) Providing an alternate dispute
resolution mechanism for the assesses;
(ii) Speedy recovery of Customs,
Central Excise duties and service tax blocked at various adjudication and
appellate levels;
(iii) To avoid costly and time
consuming litigation process;
(iv) To provide an opportunity to an
assessee to disclose true and complete figures of their liability;
(v) To promote quick settlement of
disputes.
Q. No. 3 – What is the constitution
of Settlement Commission.
The Settlement Commission consists
of one Chairman and two Members in the Principal Bench in New Delhi and one
Vice Chairman and two Members in each of the three Additional Benches.
Q. No. 4 – What are benefits of
settlement Commission.
Any person who wishes to apply for
the settlement of its case through Settlement Commission can have following
benefits
a) Savings on account of reduced
penalty or no penalty,
b) Immunity from Prosecution,
c) Savings on litigation cost,
d) Peace of mind as the settlement
order is conclusive and cannot be challenged by the department.
Q. No. 5 – Who cannot apply for
Settlement Commission.
The following categories of cases
cannot be taken up for settlement before the Settlement Commission:-
i) Any person who has not filed any
half yearly service tax returns;
However settlement commission may
dispense off with this condition if it is satisfied that the circumstances
exists for not filing the returns.
ii) Any person who has not received
any Show Cause Notice;
iii) Any person whose case is
pending with Tribunal or any Court;
iv) Where the dispute relates to
interpretation of classification of service under Finance Act, 1994;
v) Where the proceedings for the
levy, assessment and collection of service tax is pending before an
adjudicating authority as on the date of application;
vi) Where the additional amount of
tax accepted by the applicant in his application exceeds three lakh rupees; and
(d) Where the applicant has paid the
additional amount of tax accepted by him along with interest due under section
75 of the Act.
Q. No. 6 – What is the jurisdiction
of Settlement Commission.
The settlement applications made by
the applicants falling within the jurisdiction of the Commissioner with
headquarter located in the States specified in column (3), are processed and
disposed of by the Benches specified in column 2 of the table given below:
|
S. No.
|
Name of Bench
|
States covered
|
|
1.
|
Principal Bench at Delhi
|
All States and Union Territories
other than those mentioned against Sl. No. 2, 3 & 4 below
|
|
2.
|
Additional Bench at Mumbai
|
Goa, Gujarat, Maharashtra, and the
Union Territories of Daman, Diu and Dadar & Nager Haveli
|
|
3.
|
Additional Bench at Kolkata
|
Assam, Arunachal Pradesh, Bihar,
Jharkhand, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Sikkim, Tripura,
West Bengal and the Union Territory of Andaman & Nicobar Islands
|
|
4.
|
Additional Bench at Chennai
|
Andhra Pradesh, Karnataka, Kerala,
Tamil Nadu and the Union Territories of Pondicherry and Lakshadweep
|
Explanation: Ordinary jurisdiction
of a Bench is determined not by the place of business or residence of the
applicant but by the location of the headquarters of the Commissioner of
Central Excise, the Commissioner of Service Tax or the Commissioner of Customs
having jurisdiction over such applicant.
Q. No. 7 – What is the procedure of
filing an application with Settlement Commission and procedure on receipt of
application by Settlement Commission.
An applicant eligible to file an
application before settlement commission shall
a) An applicant shall file the
application in Form SC(ST)-1 in quintuplicate along with the fee of Rs. 1000/-.
The application fee should be credited in a branch,
b) An applicant shall deposit the
additional amount of tax liability admitted by it along with due interest
before filing the application for Settlement. It shall attach all the challans
in quintuplicate along with Form SC (ST)-1,
c) On receipt of application,
Settlement commission shall within 7 days issue a notice to the applicant to
explain in writing as to why the application made by him should be allowed to
be proceeded with,
d) Settlement Commission shall
within 14 days from the date of the notice shall by an order allow an
application or reject the application,
However if no notice is issued or no
order has been passed within the aforesaid period, then the application shall
be deemed to be accepted.
e) On acceptance of application or
deemed acceptance, settlement commission shall within 7 days call for a report
from jurisdictional commissioner of service tax and commissioner shall within
30 days furnish the report,
However, if commissioner does not
submit the report within 30 days, then settlement commission shall proceed with
the application without the report of commissioner.
f) On receipt of report from
commissioner, settlement commission may direct Commissioner (Investigation)
within 15 days from the date of receipt of such report to initiate further
inquiry or investigation if it is of opinion that it is necessary to do so.
Commissioner (Investigation) shall furnish a report within a period of 90 days
of the receipt of the communication from the Settlement Commission,
However, if commissioner does not
submit the report within 90 days, then settlement commission shall proceed with
the passing of the order without the report of commissioner.
g) After examination of records and
report of Commissioner and Commissioner (investigations) and after giving an
opportunity to applicant and commissioner of central excise having jurisdiction
to be heard, pass such order as it may thinks fit on the matters covered by the
application and any other matter relating to the case not covered by the
application,
f) No order of settlement commission
shall be passed after 9 months from the last day of the month in which the
application was made. After the expiry of such period, the proceedings before
settlement commission shall come to an end and adjudicating authority before
which case is pending, shall dispose of the case as if no application before
the settlement commission was made,
However settlement commission may
extend the period of 9 months to further period of 3 months by recording the
reasons in writing.
Q. No. 8 – Who can sign an
application.
The application before settlement
commission can be signed by following person:
(a) In the case of an
individual, by the individual himself or where the individual is absent from
India, by the individual concerned or by some person duly authorised by him in
this behalf; and where the individual is a minor or is mentally incapacitated
from attending to his affairs, by his guardian or by any other person competent
to act on his behalf;
(b) In the case of a Hindu
undivided family, by the Karta of such family and, where the Karta is absent
from India or is mentally incapacitated from attending to his affairs, by the
senior most adult member of the family available;
(c) In the case of a company or
local authority, by the principal officer thereof;
(d) In the case of a firm, by
any partner thereof, not being a minor;
(e) In case of any other
association, by any member of the association or the principal officer thereof;
and
(f) In the case of any other
person, by that person or some person competent to act on his behalf.
Q. No. 9 – Whether a person is
barred from making Subsequent Application for Settlement
No, it is a once in a lifetime
opportunity and no person shall be allowed to make subsequent application for
settlement in the following cases:
a) Where the order of settlement
provide for imposition of penalty on the ground of concealment of particulars
of its service tax liability; or
b) Where after the passing of order
of settlement, such person is convicted of any offence under Finance Act, 1994
in relation to the case before settlement commission; or
c) Where the commission has sent
back the application to the department as the applicant did not co-operated with
the commission.
Q. No. 10 – Is the order of
settlement commission appealable.
Every order passed by the Settlement
Commission after accepting the application shall be conclusive as to the
matters stated therein and any matter covered by such order save as otherwise
provided in Chapter V of Central Excise Act, 1944 shall not be reopened in any
proceedings under this act or under any other law.
Q. No. 11 – Whether the settlement
commission has power to send case back to the Service Tax officer.
Yes, if the settlement commission is
satisfied that the applicant has not cooperated with the commission in the
proceedings, it can send back the application. Further the department shall be
entitle to use all the materials and information produced by application before
settlement commission.
Q. No. 12 – Whether settlement
commission can order provisional attachment of property.
Yes, Settlement Commission can
provisionally attach any property belonging to the applicant if it is of the
opinion that for the purpose of protecting the interests of revenue it is
necessary so to attach the property. However such order of attachment shall
cease to have effect from the date of payment of sums due to the government for
which such attachment are made.
Q. No. 13 – Can an assessee withdraw
an application before settlement commission.
No, application once made cannot be
withdrawn.
Q. No. 14 – Is the proceedings
before the Settlement Commission the judicial proceedings.
Yes, the proceedings before
settlement commission shall be deemed to be judicial proceedings.
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