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2021 Supreme(Mad) 1341
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M. SUBRAMANIAM, J.
M/s. Great Lakes Institute of Management Ltd., Chennai - Petitioner
Versus
Customs, Central Excise and Service, Tax Settlement Commission, Additional Bench, Chennai & Another - Respondents
WP No. 3443 of 2017 & WPMP No. 3417 of 2017
Decided On : 12-08-2021
For the Petitioner:T. Mohan, R. Anish Kumar, Advocates.
For the Respondents: A.P. Srinivas, Senior Standing Counsel.
Point of law :Settlement of dispute - Settlement Commission has rightly formed an opinion that the disputed issues cannot be adjudicated in an application filed to settle the issues. Thus, the spirit of provision under the Central Excise Act, in the matter of entertaining the application for settlement has been rightly considered by the Settlement Commission and there is no infirmity or perversity as such.
Headnote:
Constitution of India,1950 - Article 226 - Finance Act, 1994 Sections 65(27), 64(105)(zzc) and 76(A)(6)(b) - Central Excise Act, 1944 - Section 32E - Application for settlement of cases - Quash the same and direct the first respondent to rehear Application - Show cause notice - Demand of amount - Whether the Show Cause Notices have included in its ambit or not is simply a question of fact and the same could have been easily sorted out by producing all evidences showing factual position and quantification of disparity - Whether the demand includes or excludes Courses approved by AICTE occupies a substantial portion of total demand - Whether actual demand included or excluded Courses appeared by AICTE - Petitioner claims as a non-profit organisation, incorporated in year 2004 under Companies Act, 1956 with an object to establish and run educational institutes, training institutes and like for propagating education in all fields in India and elsewhere - Petitioner offered other two courses namely PGPM and PGDM, was approved by AICTE and entitled to exemption from payment of service tax - Service Tax Department had earlier treated activities of the petitioner as that of a taxable service of ‘Commercial Training or Coaching Services’ within meaning of Section 65(27) of Finance Act, 1994 and had issued show cause notice - petitioner was a non-profit organisation and had entertained a bona fide doubt that its activities were outside the purview of taxable service of a ‘Commercial or Coaching Centre’ during the relevant period - Demand was confirmed by Commissioner –
Finding of the Court:
Settlement Commission followed procedures by considering the application filed by the petitioner as well as issues proposed for settlement. When the Settlement Commission, in clear terms, formed an opinion that failure of the petitioner/applicant and the absence of true spirit of settlement shows a lack of cooperation and further, the petitioner had not come out with true and full nature of disclosure and in this context, the Settlement Commission formed an opinion that Commission cannot take on itself the role of Adjudicator - First respondent that the Bench is constrained to believe that the lack of cooperation on the applicant/petitioner emerges as main cause for kind of deadlock to this issue - Commission further proceeded by stating that Settlement Commission is not the Forum to decide the Bench contentious issues by weighing in evidence let in by the rival parties to the proceedings and conclude one way or the other - Commission has rightly formed an opinion that the disputed issues cannot be adjudicated in an application filed to settle the issues - Spirit of provision under the Central Excise Act, in the matter of entertaining the application for settlement has been rightly considered by Settlement Commission and there is no infirmity or perversity as such - settlement of cases under Section 32E of the Central Excise Act, no doubt, is the right provided to a person. However, such right is contemplated subject to certain terms and conditions. The settlement, in other words, is a facility provided to get this from the adjudication party willing to settle the issues statutorily is expected to approach with true and full disclosure of facts and extend full cooperation for the settlement of issues - benefit of aggrieved persons/assessees. Under these circumstances, doubt in respect of genuinity, cooperation, disclosure of true and full facts are traced or identified by the Settlement Commission, then the Settlement Commission cannot settle the issues by way of adjudicating such issues on merits and with reference to the documents -
Result:Writ petition dismissed
JUDGMENT :
(Prayer: Writ Petition is filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorarified Mandamus, calling for the records of the impugned Final Order No.97/2016-ST dated 20.12.2016 passed by the first respondent in Show Cause Notice No.123/2011, 72/2012, 345/2013 (SOD), 24/2014 and 45/2015 (SOD) and quash the same and direct the first respondent to rehear Application No.S.A. (S.T.) No.89/2015-SC filed by the petitioner.)
1. The writ on hand is filed to call for the records of the impugned order No.97/2016-ST dated 20.12.2016 passed by the first respondent in Settlement Application No. S.A. (S.T.) No.89/2015-SC, quash the same and direct the first respondent to rehear the application and pass appropriate orders.
2. A sum of Rs.14,92,05,214/-, out of total demand of Rs.17,50,90,755/- proposed by five show cause notices, which were the subject matter of the case before the first respondent represents the demand proposed on exempted Course namely, Courses approved by All India Council for Technical Education (AICTE) as stated in the affidavit.
3. The petitioner claims as a non-profit organisation, incorporated in the year 2004 under the Companies Act, 1956 with an object to establish and run educational institutes, training institutes and the like for propagating education in all fields in India and elsewhere. The petitioner offered other two courses namely PGPM and PGDM, which was approved by AICTE and entitled to exemption from payment of service tax.
4. The Service Tax Department had earlier treated activities of the petitioner as that of a taxable service of ‘Commercial Training or Coaching Services’ within the meaning of Section 65(27) of Finance Act, 1994 and had issued show cause notice No.73/2006 dated 22.08.2006 for the period between 01.04.2004 to 31.07.2006 and proposed a demand for a sum of Rs.1,59,27,396/-.
5. The petitioner was a non-profit organisation and had entertained a bona fide doubt that its activities were outside the purview of the taxable service of a ‘Commercial or Coaching Centre’ during the relevant period. The demand was confirmed by the Commissioner vide 0.1.0 No.14/2007 dated 30.04.2007. Aggrieved by the order of the Commissioner, the petitioner preferred an appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT), Chennai.
6. The CESTAT, Chennai vide its final order No.11/2008 dated 02.01.2008 set aside the order of the second respondent-Commissioner and dropped the demand. The second respondent preferred an appeal before the Hon’ble Supreme Court of India vide Civil Appeal No.4464/2007. Meanwhile, an Explanation to Section 64(105)(zzc) to the Finance Act, 1994 was inserted vide Section 76(A)(6)(b) of the Finance Act, 2010 with retrospective effect from 1st July, 2003.
7. An attempt was made to justify the demand retrospectively. The Hon’ble Supreme Court of India vide its final order dated 14.05.2010 remanded the case back to the CESTAT to examine the issue afresh in the light of the Explanation.
8. Meanwhile, the petitioner challenged Section 76(A)(6)(b) of the Finance Act, 2010, inserting the above Explanation to Section 65(105)(zzc) of Finance Act, 1994 vide W.P.No.20385 of 2010 before this Court and the same is pending for final hearing.
9. The case of the petitioner was heard along with the batch of cases and disposed on 20.09.2013. The Larger Bench of the CESTAT has upheld the demand in the light of the retrospective amendment to the definition. During the interregnum period, the second respondent issued nine other periodical show cause notices to the petitioner.
10. The petitioner states that during April 2010, the petitioner obtained recognition from AICTE for the Courses, namely, PGPM and PGDM. Thus, from 2010, the abovesaid Courses were exempted from payment of service tax. However, demand had been proposed, ignoring the fact that the abovesaid Courses are specifically exempted from payment of service tax.
11. The petitioner
