Karnataka High Court
M/S J.M.J.Promotions vs Commissioner Of Central Excise & ... on 7 November, 2017
Author: Vineet Kothari
Bench: Vineet Kothari
1/13
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 7TH DAY OF NOVEMBER 2017
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION No.6621 OF 2017 (T-TAR)
BETWEEN:
M/s.J.M.J PROMOTIONS
PROP. GRATION ANIL PINTO
D.NO.11/8/664 (6), II FLOOR
ZAHIR TOWER, NEAR RAO & RAO CIRCLE
MANGALORE - 575001.
(REPRESENTED BY SHRI GRATION ANIL PINTO
SON OF SHRI VALERIAN PINTO
AGED ABOUT 31 YEARS
PROPRIETOR OF M/S J.M.J. PROMOTIONS) ...PETITIONER
(BY:MR.RAGHURAMAN V, ADVOCATE)
AND:
1. COMMISSIONER OF CENTRAL EXCISE
& SERVICE TAX, 7TH FLOOR, TRADE CENTRE
BUNTS HOSTEL ROAD
MANGALURU - 575 003.
2. THE VICE CHAIRMAN SETTLEMENT COMMISSION
II FLOOR, NARMADA BLOCK
CUSTOMS HOUSE, 60, RAJAJI SALAI
CHENNAI 600 001.
R2 DELETED VIDE COURT ORDER
DATED 5.9.2017 ...RESPONDENTS
(BY:MR.PRABHULING K NAVADGI, ADDL. SOLICITOR GENERAL
A/W SRI SHASHIKANTHA C, ADVOCATE FOR R-1)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
Date of Order 07-11-2017 W.P.No.6621/2017
M/s.J.M.J. Promotions Vs. Commissioner of
Central Excise & Service Tax
2/13
ORDER-IN-ORIGINAL SL. DTD.28.11.L2016 PASSED BY THE R-1
ENCLOSED IN ANNEXURE -A- BY THE WRIT OF CERTIORARI OR
ANY OTHER APPROPRIATE WRIT OR ORDER AS VIOLATIVE OF
ARTICLES 14 AND 19 BEING UNREASONABLE, USURPING
JURISDICTION, VIOLATIVE OF PRINCIPLE SOF NATURAL
JUSTICE, ARBITRARY OPPRESSIVE, EXCESIVE PREMEDICATED
AND WITHOUT THE AUTHORITY OF LAW.
THIS W.P. COMING ON FOR HEARING THIS DAY, THE
COURT MADE THE FOLLOWING:-
ORDER
Mr.Raghuraman V, Advocate for Petitioner Mr.Prabhuling K. Navadgi, Addl. Solicitor General a/w Sri Shashikantha.C, Advocate for Respondent No.1 The Petitioner - M/s.J.M.J. Promotions has filed this petition in this Court on 13.2.2017 challenging the impugned order Annexure-A dated 21.11.2016 passed by the Respondent - Commissioner of Central Excise and Service Tax, Dr.M.Subramanyam withdrawing the immunities granted under the Order No.18/2014-ST dated 28.3.2014 passed by the Settlement Commission under the provisions of Section 32K of the Central Excise Act read with Section 83 of the Finance Act, 1994.
Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 3/13
2. The Settlement Commission, in its order Annexure-T dated 28.3.2014 had given the following directions:-
"7. In the light of the above, the Bench settles the case on the following terms and conditions under the Central Excise Act, 1944 made applicable to Service Tax matters by Section 83 of the Finance Act, 1994.
i) The additional amount of Service Tax is settled at Rs.2,18,74,972/-
(Rupees two crore eighteen lakhs seventy four thousand nine hundred and seventy two only). As an amount of Rs.1,14,05,197/- has already been paid towards additional Service Tax liability, the balance amount of Rs.1,04,69,775/- should be paid within 30 days of receipt of this order and proof of payment furnished to the Jurisdictional Commissioner.
ii) The applicable interest on the Service Tax settled shall be calculated by the applicant to the satisfaction of Jurisdictional Commissioner and the payment should be made by the applicant within 30 days of receipt of this order and Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 4/13 proof of payment furnished to the Jurisdictional Commissioner.
iii) The Bench imposes a penalty of Rs.7,50,000/- (Rupees seven lakhs fifty thousand only) on the applicant under the provisions invoked in the Show Cause Notice and grants immunity in excess of the penalty indicated herein. This amount should be paid by the applicant within 30 days of receipt of this order and proof of payment be furnished to Jurisdictional Commissioner.
iv) Subject to payment of amounts as ordered above, the applicant is granted immunity from prosecution
under Section 32K of Central Excise Act, 1944, as made applicable to Service Tax vide Section 83 of the Finance Act, 1994. 7.2 The immunities are granted in terms of Section 32K of the Central Excise Act, 1944, as made applicable to Service Tax vide Section 83 of the Finance Act, 1994. The immunities granted above are liable to be withdrawn if, at any time, it comes to the notice of the Bench that, in obtaining this order of settlement, any Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 5/13 material particulars have been withheld or any false evidence has been given.
7.3 A copy of this order be given to the Applicant and the Jurisdictional Commissioner for their use in the implementation of this order. No one should use this order in any other manner or for any other purpose without the written permission of the Commission."
3. The Petitioner Company made a representation before the Respondent - Commissioner of Central Excise and Service Tax, vide Annexure-U dated 30.4.2014 and gave the details of 15 payments made on different dates purportedly for satisfaction of the conditions imposed by the Settlement Commission for payment of Service Tax to the total extent of `2,19,58,765.00 2,19,58,765.00.
5.00 The period of Settlement covered by the Settlement Commission was 2007-2008 to 2011- 2012.
4. However, the Respondent- Commissioner of Central Excise and Service Tax passed the impugned Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 6/13 order Annexure-A dated 21.11.2016 withdrawing the immunity granted to the petitioner by the Settlement Commission on the ground that the Petitioner had not really complied with the condition imposed by the Settlement Commission in its order Annexure-T dated 28.3.2014 and the payment of Service Tax was not made for the period covered by the Settlement Commission's order, but some of the payments pertained to the period falling after 2011-2012.
4. The operative portion of the impugned order passed by the Respondent-Commissioner of Central Excise and Service Tax on 21.11.2016 is also quoted below for ready reference:
(i) I confirm that only Rs.1,10,70,000/- as detailed at para 14.1 above has been paid against the additional amount of service tax settled of Rs.2,18,74,972/- settled vide the order No.18/2014-ST dated 28.03.2014 of the Hon'ble Settlement Commission within the stipulated time.
Therefore, I hold that the service Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 7/13 provider has not complied with the order of the Hon'ble Settlement Commission.
(ii) Immunities granted under the order No.18/2014-ST dated 28.03.2014 of the Hon'ble Settlement Commission stands withdrawn in terms of Section 32K of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.
(iii) Sums due under the order of settlement as mentioned at sl.no.(i) above and including interest are liable to be recovered by taking recourse to Section 11 of the Central Excise Act, 1944 in terms of Section 32F(9)/32N of the Central Excise Act, 1994 read with Section 83 of the Finance Act, 1994.
(iv) I impose penalty of Rs.2,18,74,972/-
(rupees two crore eighteen lakh seventy four thousand nine hundred seventy two only) under Section 78 of the Act, for suppressing the facts of rendering of taxable services by them, non-payment of applicable service tax and the collection of service tax and non remitting the same to Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 8/13 be Government exchequer with an intention to evade payment of service tax.
(v) I impose penalty of Rs.10,000/- (rupees ten thousand only) under Section 77(1)(a) of the Act, for their failure to obtain Service Tax registration within the stipulated time under the category of 'Manpower Recruitment and Supply Agency Service', 'Security Agency's Service and 'Commercial Training or Coaching Services' as required under Section 69 of the Act read with Rule 4 of the Service Tax Rules, 1994.
(vi) I impose penalty of Rs.10,000/- (rupees ten thousand only) under Section 77(2) of the Act for their failure to remit the service tax collected from their clients to the credit of the Central Government Account .
(vii) I confirm demand of Rs.2,00,000/- under Rule 7C of the Service Tax Rules, 1994 read with Section 70 of the Act for their failure to file/delayed submission of statutory returns for half year ending September 2007; March, 2008; September 2008; March 2009; September, 2009; March, 2010; September, 2010; March Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 9/13 2011; September, 2011 and March, 2012 (i.e. at the rate of Rs.20,000/- per return).
(viii) I drop the proposal to impose the penalty under Section 76 of the Act."
5. Aggrieved by the same, the Petitioner is before this Court in the aforesaid writ petition. Upon issuance of notice, the Respondents have put in appearance and filed their Statement of Objections.
6. Mr.Prabhuling K. Navadgi, learned Additional Solicitor General has submitted before the Court with reference to Annexure-U communication of the Petitioner dated 30.4.2014 alongwith the list of 15 Challans (page No.214 of paperbook) that only first five payments pertained to the period covered by the Settlement Commissioner's order, namely, 2007-2008, 2011-2012 and the remaining payments were for subsequent period and therefore they could not be treated as sufficient compliance of the order passed by the Settlement Commission and therefore the Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 10/13 Respondent- Commissioner of Central Excise and Service Tax was entitled to treat the immunity as withdrawn under the provisions of Section 32K of the Act.
7. On the other hand, Mr.Raghuraman.V, learned counsel for the Petitioner submitted that this was not the correct position and the payments made by the Petitioner were for the period covered by the order of the Settlement Commission and the additional documents have been filed by both the parties in pursuance of the directions of this Court.
8. However, after hearing both the learned counsels and upon perusal of the said documents, this Court is of the opinion that it is not open to the Respondent-Commissioner of Central Excise and Service Tax to himself treat the order of Settlement Commission as non est because, in his opinion, the condition of granting immunity under the said order by Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 11/13 payment of service tax dues to the extent of `2.19 crore was not satisfied. If at all factually the said Commissioner held such a view, the only course open to him was to approach the Settlement Commission by way of a suitable Miscellaneous Application with the relevant facts, whereupon the Settlement Commission, after giving an opportunity of hearing to the Petitioner could arrive at its own appropriate conclusions and pass appropriate fresh orders.
9. Both the parties, namely, the Petitioner and the Commissioner of Central Excise and Service Tax only being the rival parties before the said Settlement Commission could not undo the effect of the order passed by the Settlement Commission at their own level and therefore, it was incumbent for the Respondent Commissioner of Central Excise and Service Tax to have approached the Settlement Commission seeking a modification or review of the order passed by the Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 12/13 Settlement Commission. The Petitioner was also required to be given an opportunity of hearing by the Settlement Commission in this regard.
10. Therefore, at this stage, this Court does not consider it appropriate to undertake itself such exercise in the present writ petition at its own level and it is considered appropriate to relegate both the parties before the Settlement Commission.
11. This petition is accordingly disposed of by directing both the parties to appear before the Settlement Commission again where the Respondent Commissioner of Central Excise and Service Tax is free to move appropriate application alongwith the relevant evidence seeking a review or modification of the order passed by the Settlement Commission vide Annexure-T dated 28.3.2014 and the Settlement Commission, after giving appropriate opportunity of hearing to the Date of Order 07-11-2017 W.P.No.6621/2017 M/s.J.M.J. Promotions Vs. Commissioner of Central Excise & Service Tax 13/13 Petitioner, may pass appropriate orders in accordance with law.
12. The parties in the first instance may appear before the Settlement Commission on 11.12.2017 (Monday) and a period of six months is allowed to the Settlement Commission to pass appropriate orders in accordance with law.
13. The contempt proceedings initiated against the Respondent- Commissioner of Central Excise and Service Tax are also dropped without any further orders.
14. With these observations and directions this petition is disposed of. No costs.
Sd/-
JUDGE VGR