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Dated: 06.03.2024

Settlement Commission- “An Alternate Dispute Resolution mechanism for Tax Payers”

The Customs, Central Excise and Service Tax Settlement Commission (hereinafter referred to as “the Commission”) provides an alternative dispute resolution mechanism for taxpayers seeking to resolve tax disputes through conciliation rather than litigation.

This provision is enshrined in Chapter V of the Central Excise Act, 1944, Section 83 of the Finance Act, 1994 (pertaining to Service Tax), and Chapter XIV of the Customs Act, 1962.

Under these statutes, any taxpayer who has been served with a show cause notice and whose case is pending adjudication may submit an application in the prescribed format. This application must include a comprehensive disclosure of the taxpayer’s admitted duty liability and interest, along with arguments contesting any issues raised therein.

Upon receiving such an application, the Commission forwards it to the relevant authority that issued the show cause notice for review and comments. Subsequently, the Commissioner (Investigation), appointed to each of the Commission’s Benches situated in Chennai, Delhi, Kolkata, and Mumbai, scrutinizes the application before scheduling a hearing on the matter.

View a short overview on our YouTube Channel

Powers of Settlement Commission:

1. The Settlement Commission has powers to grant immunity from prosecution for any offence under the Central Excise Act, the Customs Act or under the Indian Penal Code or under any other Central Act for the time being in force in respect of the case covered by the Settlement Commission- Section 127H
2. The Commission also has powers to grant immunity either wholly or in part from the imposition of any penalty and fine under the Central Excise Act or the Customs Act, as the case may be in respect of the case covered by the Settlement Commission- Section 127H
3. The proceedings before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of Section 193 and 228, and for the purposes of Section 196 of the Indian Penal Code.

Limitations of settlement commission:

The following category of cases are excluded from the purview of the Settlement Commission:

1. Cases relating to Customs duty where no Bill of Entry or Shipping Bill, or a bill of export, or made a baggage declaration, or a label or declaration accompanying the goods imported or exported through post or courier, as the case may be, has been filed.
2. Cases relating to Central Excise duty where no monthly returns showing production, clearances and Central Excise Duty paid in the prescribed manner has been filed. Cases relating to Service Tax where no return has been filed. Provided further that the Settlement Commission, if it is satisfied that the circumstances exist for not filing the returns, allow the applicant to make such application.
3. Cases where no Show Cause Notice has been issued to the applicant- Section 28 (1)(a) of the Indian Customs Act, 1962
4. Cases where the additional amount of Central Excise Duty/Customs Duty/Service Tax accepted by the applicant in his application does not exceed Rs 3 Lakh.
5. Cases involving interpretation of the classification of goods under the Central Excise Tariff Act, 1985 or the Customs Tariff Act, 1975.
6. Customs, Central Excise and Service Tax cases which are pending with the Appellate Tribunal or with any court at the time of making the application.
7. Customs cases to which section 123 of the Customs Act applies or cases under the NDPS Act.

The current commission members are as per the Public Notice No. 02/2023 dtd 03^rd August 2023.

Download the Public Notice below:

Source: Settlement Commission, Deptt of Revenue, Min of Finance, Govt of India

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