Settlement Commission easing load of cases on higher judiciary

The basic objective of setting up of the Settlement Commission was to expedite payments of customs and central excise duties involved in disputes by avoiding expensive and time consuming litigation process and to give an opportunity to tax payers to come clean. So far, 20621 applicants have approached the commission out of which 3,189 have been rejected and 17287 have been settled. "This has resulted in payment of Rs 6,40,048 lakhs to the exchequer. The commission has achieved more than the objectives," says Sunil Kumar Das, Chairman, Customs and Central Excise Settlement Commission, in an exclusive interview with Bizz Buzz

On analysis of the expenses incurred in maintaining the institution and the revenue realised it has been observed that against the average per annum revenue of Rs 428 crore (approx.), the expenses incurred are only Rs 13 crore per annum which shows that the institution is quite cost effective

As per the provisions of the Central Excise Act, 1944, the time frame for issuing a settlement order is nine months which is extendable by three months. Since the provisions of Central Excise Act have been made applicable to the Finance Act, 1994, so time frame for Service tax cases is also the same. However, in the settlement commission most orders are issued within six months

When was the Settlement Commission constituted and what is the organizational structure of the commission?

The Settlement Commission was constituted w.e.f. June 9, 1999, vide notification no. 40/99 CX(NT) dated 09-06-1999. It consists of chairman, three vice-chairmen and eight members functioning under department of revenue, Ministry of Finance. Principal bench is at Delhi and there are additional benches at Mumbai, Chennai and Kolkata. The chairman, vice chairman and other members of settlement commission are appointed from amongst persons of integrity and outstanding ability, having special knowledge of and experience in administration of customs and central excise laws. The powers and authority of the settlement commission is exercised by the principal bench at Delhi and additional benches at Mumbai, Kolkata and Chennai established by the central government. Decisions of the commission are by majority.

What was the purpose and aim of the government in constituting Settlement Commission?

The basic objective of setting up of the settlement commission was to expedite payments of customs and central excise duties involved in disputes by avoiding expensive and time consuming litigation process and to give an opportunity to tax payers to come clean. It provides a forum for the assessees to apply for settlement of their cases on the basis of true and complete disclosure of their duty liabilities under Chapter V of the Central Excise Act, 1944, and Chapter XVIA of the Customs Act, 1962. Settlement Commission was set up as an independent body, manned by experienced tax officers of 'integrity and outstanding ability' (Sec 32(3) of Central Excise Act), capable of inspiring confidence in trade and industry and entrusted with the responsibility of safeguarding due 'revenue interest'. The proceedings before it are declared 'judicial proceedings' within the meaning of section 193,196 and 228 of the IPC.

What are the advantages of the Settlement Commission?

Well, the advantages of Settlement Commission can be summarized as following:

i. Quick and easy settlement of disputes of high revenue stakes.

ii. Tax evaders motivated to come clean.

iii. It is chance to turn new leaf by paying taxes with interest and avoid further liabilities.

iv. Waiver/reduction of penalty or fine. Immunity from prosecution may also be granted to assessee, its directors and partners.

v. Reduce litigations and huge cost thereon for all stake holders.

Moreover, the present government is keen on promoting ease of doing business, so the Settlement Commission plays a crucial role towards achieving this.

Do you think the Settlement Commission has been able to achieve the objective with which it was set up?

Yes. The Commission has achieved more than the objectives. So far, 20,621 applicants have approached the commission out of which 3,189 have been rejected and 17,287 have been settled. This has resulted in payment of Rs6,40,048 lakhs to the exchequer. Each of the cases was disposed of in less than nine months. This also resulted in huge cost cutting on avoidable litigations and prevented huge caseloads on higher judiciary. The institution works highly professionally. The provision for settlement in tax laws is also in accordance with the international practices.

What is the time frame in which the cases are finalised?

Well, as per the provisions of the Central Excise Act, 1944, the time frame for issuing a settlement order is nine months which is extendable by three months. Since the provisions of Central Excise Act have been made applicable to the Finance Act, 1994 so time frame for Service tax cases is also the same. However, in the settlement commission most orders are issued within six months.

How accessible is the Settlement Commission?

Well, the Commission is easily accessible and anyone who has been issued a show cause notice which is pending for adjudication before an adjudicating authority can approach settlement commission for settlement of his/her case.

What is the cost effectiveness of the organization?

On analysis of the expenses incurred in maintaining the institution and the revenue realised it has been observed that against the average per annum revenue of Rs428 crore (approx.), the expenses incurred are only Rs 13 crore per annum which shows that the institution is quite cost effective.

It is understood that of late there has been consistent decline in number of applications received in the commission, especially after 2016-17?

Well, the main reason is that as a measure of tax reforms the government has replaced cumbersome tax structure with GST, adopting the concept of 'one nation one tax'. Under the new GST Act, the provisions of settlement have not yet been included resulting in reduced numbers. However, customs cases and legacy central excise and service tax cases are consistently coming.

It is also seen that in the current financial year there has been disposal of a very few cases, any particular reason for the same?

Well, at present, the Commission does not have functional benches as all of the sitting members of the various benches in the commission have retired.

Why is the appointment of the new members taking time?

The process of selection of new members has been initiated. The vacancies have been already advertised and many candidates have applied for the post. Their selection process is under progress.