Clipped from: https://www.business-standard.com/article/opinion/settlement-commission-looks-to-raise-awareness-through-faqs-123031200958_1.html
Where the taxpayers are doubtful on whether they will be penalized, it makes sense to opt for settlement and get a quick closure. For them, the latest FAQs give a quick initiation
Last Monday, the Customs, Central Excise and Service Tax Settlement Commission issued a set of frequently asked questions (FAQs) clarifying various provisions under the relevant laws, aiming to raise awareness in the trade regarding this alternate dispute resolution forum for taxpayers who want to resolve their tax disputes in a spirit of conciliation and avoid litigation.
The main advantage of approaching the Settlement Commission is that it ends the uncertainty quickly. The Commission must pass the settlement order within nine months from the date of filing the application. It can grant waiver from fine, penalty and immunity from prosecution. Its settlement order is conclusive with respect to the matters settled therein and cannot be re-opened in any proceedings under the relevant Act or under any other law for the time being in force.
An application for settlement of a case can be filed in respect of a show-cause notice issued to a taxpayer that is pending adjudication under any of the three Acts. However, the applicant must admit an additional liability of at least Rs 3 lakh and pay it upfront, along with interest besides the prescribed fees. The person must also make full and true disclosure of relevant facts and co-operate in the proceedings. If he fails to do so, the Commission can refuse to admit or go ahead with the proceedings and send back the matter for adjudication.
The procedure includes admitting the application after preliminary hearing, receiving comments from the jurisdictional authorities, investigations if necessary, final hearings and a final order of the Commission. The proceedings before the Commission are judicial proceedings under the relevant provisions of the Indian Penal Code and the relevant tax laws.
The Commission consists of a principal bench at New Delhi and three additional benches at Mumbai, Chennai and Kolkata.
The applicant can seek transfer of proceedings from one bench to the other and can ask for virtual or in-person hearings. Every now and then, the Commission could not function as enough members were not appointed to deal with the applications but now there are three members who take up different roles in each bench to make up the quorum.
The provisions for Settlement Commission in the Customs and Central Excise laws were introduced through the Finance Act, 1998. The Service Tax matters were brought within the jurisdiction of the Settlement Commission in 2012. Initially, the taxpayers could approach the Settlement Commission any number of times and even on matters pending at the appeal stage. But since the amendments to the relevant laws in 2007, the procedure for settlement cannot be availed after a case has been adjudicated. Also, the taxpayer cannot approach the Commission a second time in certain circumstances.
Generally, the taxpayers receive show-cause notices alleging wilful suppression of facts, intent to evade duty etc. without any justification. In such cases, they are quite confident of getting judgments/orders from the tribunals/courts setting aside the demands for penalties. So, most taxpayers prefer not to opt for settlement, unless they expect to lose their cases and get penalized in the normal appeal proceedings. Where the taxpayers are doubtful on whether they will be penalized, it makes sense to opt for settlement and get a quick closure. For them, the latest FAQs issued by the Settlement Commission give a quick initiation.