By TIOL News Service

MUMBAI, JUNE 22, 2018: THE petitioner has questioned the legality of the order dated 21st August, 2017, passed by the Settlement Commission rejecting the application filed by the petitioner as not maintainable u/s 32E(1) of the CEA, 1944.

The petitioner was served with a SCN dated 19th October, 2013 demanding service tax amounting to Rs.1,88,23,722/-, for the period of 2008-09 to 2012-13, alongwith interest and proposing imposition of penalty. The SCN also sought to appropriate the amount of Rs.1,03,88,821/- already paid.

An application was filed before the Settlement Commission on 21st March, 2017. The calculation sheets as well as copies of challans evidencing payment of service tax with interest as well as invoices on which CENVAT Credit was availed, as well as copies of ST-3 Returns filed by the petitioner were enclosed along with the said application.

The application came up for hearing on 19th May, 2017, before respondent no.2.

The petitioner was called upon to submit documents to the Jurisdictional Revenue Authorities for verification of availability of CENVAT Credit. The petitioner submitted all the required documents vide letter dated 19th May, 2017.

According to petitioner, the Interim Report was sent to respondent no.2 (by Commissioner of Service Tax-VII, Mumbai) without providing an opportunity to the petitioner to submit any documents.

The petitioner forwarded reply dated 30th June, 2017, to respondent no.2 in response to the Interim Report of Jurisdictional Revenue Authority and explained all the discrepancies mentioned in the Report and it was also pointed out that all the documents were provided except the CENVAT Register.

It is contended that despite the submissions of the petitioner, respondent no.2 relied upon erroneous Report of the Jurisdictional Revenue Authorities and rejected the Settlement Application vide order dated 21st August, 2017, on the ground that the same is not maintainable.

The counsel for the respondent Revenue submitted that sufficient opportunity was given to the petitioner to produce requisite documents, but, the petitioner have not responded. And, therefore, no fault can be noted in the impugned order.

The High Court considered the submissions and observed thus -

+ 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.

+ The petitioner's case is that show-cause notice specifically mentions that CENVAT Credits available to the petitioner were verified during the investigation and the petitioner has availed CENVAT Credit on the said basis, which fact is brought up in reply dated 30th June, 2017. The petitioner has submitted that even though all documents, as required, was provided barring CENVAT Credit Register, the request for which was only brought to the attention of the petitioner by letter dated 14th June, 2017, received on 16th June, 2017.

+ It is stated that the Revenue was asked to submit Final Verification Report and file their comments with reference to petitioner's letter dated 30th June, 2017, but, no Report is filed by the Revenue and, thereby, the Revenue has failed to file their Final Report within the stipulated time.

+ It is apparent that the application was basically rejected on the ground of non-production of documents. The contention of the petitioner is that all the documents was on record and in the event there was any specific requisition from the respondent no.2 to file certain documents, he was ready to produce the same. For all these reasons stated above, it appears that respondent no.2 has hurriedly rejected the application for Settlement without giving sufficient opportunity to the petitioner.

+ In the present case, respondent no.2 proceeded on interim report of revenue and before receipt of final report, the impugned order was passed.

+ 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. The impugned order makes the note that no one from Revenue had appeared for hearing on 19th May, 2017 and the final report of the said Authority was not forthcoming.

In fine, the impugned order was set aside and the matter remanded to the Settlement Commission for fresh consideration.

The Writ Petition was disposed of.

(See 2018-TIOL-1167-HC-MUM-ST)