The object behind the setting up the Settlement Commission was to create a channel, whereby tax disputes can be settled expeditiously and in a spirit of conciliation rather than prolonging them through adversarial attitude. The Settlement Commission is not designed to provide an escape route for tax evaders. It is, in fact, designed to provide a balanced resolution of tax disputes with a view to avoid lengthy litigation which helps neither the department nor the assessee. In the proceedings before the Settlement Commission, there are no adversaries but only parties to the Settlement. Any assessee can make an application containing “Full & True” disclosure of his duty liability which has not been disclosed before the proper officer having jurisdiction.
There are some riders and certain category of cases is excluded from the purview of the Settlement Commission. Application cannot be made before Settlement Commission: (i) Cases relating to Service Tax where no return has been filed. (ii). Cases where no Show Cause Notice has been issued to the applicant. (iii) Cases where the additional amount of Service Tax accepted by the applicant in the application does not exceed Rs.3 lakh. (iv) Service Tax cases which are pending with the Appellate Tribunal or with any court at the time of making the application.
If one looks at the first restriction, it says that if the assessee has not filed the return, he cannot opt for settlement. The Budget 2014 has subjectively relaxed this restriction, therefore, if the Settlement Commission, if satisfied that the circumstances exist for not filing the returns, after recording the reasons thereof, may allow the applicant to make such application. This is a welcome change for those assessees who, because of some bonafide interpretation belief chose to assume that their services are not taxable and consequently, neither registered with the department nor filed the return. Now, the door of settlement commission is open for such assessee if they are able to satisfy the settlement commission for their reasons of non-filing of returns.
Other changes made by the Budget 2014 with respect to the settlement commission are superficial. First being the name of the “Customs and Central Excise Settlement Commission” is changed to the “Customs, Central Excise and Service Tax Settlement Commission”. Another change is made in Section 32E, the said section referred to the section 11AB of the Central Excise Act, 1944 in relation to the ‘interest on delayed payment of duty'. However no such section existed after the Section 11AA came into force. This has corrected by replacing the reference to section 11AB with a reference to section 11AA. Another minor change has been done by adding an Explanation that the ‘concealment’ of particulars of duty liability relates to such concealment made from the officer of central excise and not from the Settlement Commission.
The Budget 2014 has enhanced the scope of the settlement commission, with a view to reduce the pendency of various courts and for early recovery of Government dues. As far as the Settlement Commission is concerned, it is more of a means to an end rather than an end in itself. Further, it can be said that if law itself is crisp and clear then the assessee as well as the department should neither need bodies like settlement commission nor schemes like VCES.