Reliance in this regard can be placed on the decision of Hon’ble Allahabad High Court in case of M/s Vinay Wire and Poly Product Private Limited Vs. DGCEx [Writ Tax No. 283 of 2014] wherein the appellant has challenged the order of Hon’ble Settlement Commission passed u/s 32E of CEA, 1944.
The department conducted search in the premises of the appellant and quantified a total duty evasion to the tune of INR 7.81 Crores. The appellant stated filed an application before the Settlement Commission and stated that the Department officers implanted fake files in the premises of the appellant and calculated demand on the basis of such fake files. The appellant agreed to the demand of INR 63 Lakhs and paid the same and prayed for immunity from penalty and prosecution under the Act. The Hon’ble Commission accepted the application and called for a report from the Commissioner as required u/s 32F of the Act. The commission held that since the applicant has not accepted the substantial part of the demand and had not only alleged that the evidence was fabricated and tampered with but had also disputed the very basis of investigation, the disclosure cannot be said to be true and complete. The Counsel for the appellant submitted that since the assessee has cooperated with the Sett. Comm. thus the Commission cannot remand back the case to the AO.
The Hon’ble High Court held that as per Section 32-F it is ample clear that the Sett. Comm. has power to provide the terms of Settlement and also reject the application by recording the reasons for doing so. The Hon’ble Court while dismissing the Writ Petition held that
“This submission cannot also be accepted. The Settlement Commission has given good and cogent reasons for sending the case back to the adjudicating authority. The Settlement Commission noticed that the applicants had not accepted a substantial part of the duty liability and had in fact contested the evidence collected by the Revenue as being fabricated and tampered with. It also noticed that the Revenue had given reasons to substantiate its position regarding the investigation as well as the quantification of duty liability. In such a situation, the Settlement Commission thought it appropriate, particularly when the applicants had not made a full and true disclosure and that complex questions of fact, which required appreciation of evidence, were required to be settled through adjudication. A fair amount of discretion has to be given to the Settlement Commission in cases where matters are placed before it for settlement keeping in mind the well settled principle that settlement is not akin to adjudication. Unless it is established that the discretion has been exercised in an arbitrary or perverse manner or that it is not based on relevant considerations or has taken into consideration irrelevant matters, Courts will not interfere in the exercise of such discretion by the Settlement Commission under Article 226 of the Constitution.”
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Author- Aditya Singhania & Nischal Agarwal