READING DOWN MODEL IGST ACT – (SETTLEMENT OF CASES)(PART-11)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 4-8-2016
Chapter VIII comprising of Sections 11 to 26 of the Model IGST Law provide for settlement of cases. There is no provision for settlement in Model GST Law but Chapter XX of the said Act states that at present, the provisions for settlement of cases are incorporated under IGST Act. It appears that similar provisions may be contained in CGST law.
Under the present law, provisions for settlement of cases do exist, both in Service Tax and Central Excise. (Section 31, 32 to 32P of Central Excise Act, 1944).
Background of Settlement
The concept of Settlement Commission is based on Wanchoo Committee Report. The objectives of Settlement Commission is to provide quick and easy settlement of indirect tax disputes of high revenue stake so that time and energy of both, litigants and the Department are saved. Settlement Commission serves the followi
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gid attitude would not only inhibit a one-time tax-evader or an un-intending defaulter from making a clean breast of his affairs, but would also unnecessarily strain the investigation resources of the department in case of doubtful benefit to revenue while needlessly proliferating litigation and holding up collections. We would, therefore, suggest that there should be a provision in law for a settlement with a tax payer at any stage of the proceedings".
Bombay high court in A Mahesh Raj 2001 (6) TMI 227 – SETTLEMENT COMMISSION, CUSTOMS & CENTRAL EXCISE held that settlement machinery is meant for providing chance to tax evader who wants to turn a new leaf, as recommended by Direct Taxes Enquiry Committee (Wanchoo Committee). Also see Wipro GE Medical Systems 2002 (6) TMI 221 – SETTLEMENT COMMISSION, CUSTOMS & CENTRAL EXCISE, . In yet another case of Mandhana Dyeing v. Union of India 2010 (1) TMI 241 – BOMBAY HIGH COURT , it was held that object of Settlement Commission is not to c
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Section 32E(1) of the Act, the respondents 'to have the case settled' and 'before adjudication', instead of filing a reply to the notice and having the case adjudicated, filed applications before the Commission for settlement.
Statutory Provisions in Draft IGST Law
Model IGST law contains the following provisions in relation to settlement of cases
Section
Provision Relating to
11
Definitions – bench, case, Settlement Commission etc
12
Constitution of National Goods and Service Tax Settlement Commission
13
Jurisdiction and Powers of Settlement Commission
Settlement Commission (SC)
The Settlement Commission shall be constituted by the Central Government on the recommendation of GST Council which will be called National Goods and Service Tax Settlement Commission (NGSTSC) which will be headed by National Chairman. The Commission will have benches for one or more state benches to be called State Settlement Commission (SSC) to be headed by State Chairman. NGST
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–
* levy of IGST, or
* assessment of IGST, or
* collection of IGST, or
Pending before first appellate authority- appeal in connection with levy, assessment or collection of IGST
on the date of application before SC.
What is important is that the matter must relate to levy / assessment / collection / appeal of IGST and pending on the date of making application for settlement. Where an order is passed by an adjudicating authority and for which the appeal period has not expired shall also be deemed to be a proceeding pending.
Following cases shall not be covered within the scope of 'case' for consideration by the SC-
* where any appeal has been preferred after expiry of the period specified for filing such appeal under this Act and which has not been admitted.
* where any Court or Appellate Tribunal or the First Appellate Authority refers a case back to the original adjudicating authority or the First Appellate Authority, as the case may be, for a fresh adjudicatio
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pplication exceeds five lakh rupees; and
* the applicant has paid the additional amount of tax accepted by him along with interest due thereon under section 36 of the CGST Act
In case of non-filing of return, if SC is satisfied that there exists reasons for non-filing of returns, it may allow the application to be made, after recording reasons for the same.
It has also been provided that –
* No application shall be entertained by the Settlement Commission in cases which are pending with the Appellate Tribunal or any Court.
* No application shall be made for determination of any question having a bearing on the rate of tax or determination of liability to pay tax on goods and/or services under the Act.
* Every application made shall be accompanied by prescribed fees.
* An application once made shall not be allowed to be withdrawn by the applicant.
Disposal of Application
Section 16 provides for procedure for settlement / disposal of application by the SC. Accordingly, fol
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e date of order, call for a report along with the relevant records from the jurisdictional IGST officer.
* Such officer shall furnish the report within a period of sixty days of the receipt of communication from the Settlement Commission.
* Where the jurisdictional IGST officer does not furnish the report within the aforesaid period of sixty days, the Settlement Commission shall proceed further in the matter without the report of such officer.
* After examination of the report of the jurisdictional IGST officer received, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may, within 15 days of the receipt of the report, direct, for reasons to be recorded in writing, the Designated Officer to make such further enquiry or investigation and furnish a report within a period of ninety days of the receipt of such direction, on the matters covered by the application and any other matter relating to the case.
* Where
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e less than the tax liability admitted by the applicant.
* Settlement arrived shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts.
* Where any tax, interest, fine and penalty payable in pursuance of an order is not paid by the taxpayer within thirty days of receipt of a copy of the order by him, or within such period as extended by the Settlement Commission not exceeding three months, the amount which remains unpaid, shall be recovered along with interest due thereon at the rate prescribed under section 36 of the CGST Act.
Order of Commission shall be conclusive and no matters covered by such order can be reopened (except as provided in section 18) in any proceedings under IGST Act or under any other law.
Powers of Settlement Commission
SC shall have the following powers to be exercised in the course of its functioning –
* Power to order provisional attachment to protect revenue (Section 17)
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