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Q 1. What are the basic objective of Settlement
Commission?
Ans. The basic objectives of setting up of the Settlement
Commission are:-
i. to provide an alternate channel for dispute
resolution for the taxpayer;
ii. to expedite payment of GST involved in disputes
by avoiding costly and time consuming litigation
process;
iii. to provide an opportunity to tax payers to come
clean who may have evaded payment of tax;
iv. to serve as a forum for the taxpayer to apply
for settlement of their cases, on the basis of true
and complete disclosure of their tax liability;
v. to encourage quick settlement of disputes and
save the business from the worries of prosecution
in certain situations.
Q 2. Can tax disputes arising on account of both
intra-state and inter-state transactions be settled
under the MGL?
Ans. In the Model GST Law, the provisions for Settlement
Commission are incorporated only under the IGST Act
(sections 11 to 26). This implies that cases cannot be
settled in relation to tax liability pertaining to intra-state
transactions. However, there is a possibility that those state
tax administrations which want to constitute Settlement Commission can do so on the basis of the template provided
under the IGST Act and the CGST Act can have an enabling
provision drawing from the IGST Act for such states.
Q 3. What is meant by a Case under the provisions
of Settlement in the MGL?
Ans. As per Section 11, Case means any proceeding under
the IGST Act for levy, assessment and collection of IGST
before an IGST officer or before a First Appellate Authority
in connection with such levy, assessment or collection of
IGST pending on the date on which an application for
settlement is made. Case will also mean an order passed by
an adjudicating authority for which the period of appeal
has not expired. It is clarified in the definition that an
appeal filed after the expiry of the period of appeal or a
case remanded by a higher judicial authority to a lower one
will not be treated as a proceeding pending and therefore
no application for settlement can be made in such cases.
Q 4. What will be the composition of members
which will consider/hear settlement application?
Ans. Every application for settlement shall be heard by
a bench presided over by the State Chairman and shall
consist of two other members. The State Chairman shall be
a sitting or a retired judge of a High Court. The other two
members will be Technical members drawn from the CGST
administration.
Q 5. What happens when there is difference of
opinion amongst members hearing the settlement
application?
Ans. Section 14 of the IGST Act provides that where the
members of a bench of Settlement Commission differ on any
point, the decision shall be taken on the basis of the majority
opinion. It is provided that a decision can also be taken by a
bench consisting of only two members, if the third member is
not available due to factors like absence, illness or vacancy. If
there is a difference of opinion between such two members, the
matter will then be referred to a third member, and decision
will be taken by the majority opinion.
Q 6. Who can apply for settlement?
Ans As per section 15 of the IGST Act, any taxable person
can apply for settlement of a case in relation to which he
has been issued one or more show cause notice(s) under the
IGST Act and the same is pending before the adjudicating
authority or the First Appellate Authority.
Q 7. What should be the contents of the settlement
application?
Ans. The settlement application should contain full and
true disclosure of:
i. tax Liability which has not been disclosed to the
proper officer of IGST;
ii. manner of deriving such tax liability;
iii. additional amount of tax which he accepts to be
payable;
iv. other particulars such as misclassification,
exemption notification because of which he
admits to short payment.
Q 8. What are the conditions which must be fulfilled
before application for settlement can be accepted?
Ans. As per section 15 of the IGST Act, the following
conditions must be fulfilled before an application for
settlement of a case can be accepted:
(a) the applicant has furnished the return(s), which
he is or was required to furnish under the IGST
Act or this requirement has been waived by
the Settlement Commission after recording
the reasons that it was satisfied that certain
valid circumstances existed for not filing the
return(s);
(b) the applicant has received a show cause notice
for demand of tax or has received an order
confirming the demand of tax issued by the IGST
officer and the same is pending before the First
Appellate Authority;
(c) the additional amount of tax accepted by the
applicant in his application exceeds five lakh
rupees; and
(d) the applicant has paid the additional amount of
tax accepted by him along with the interest due
thereon under section 36 of the CGST Act.
Q 9. What are the circumstances in which
application for settlement cannot be entertained?
Ans. As per section 15 of the IGST Act, in the following
circumstances, Settlement Commission will not accept an
application for settlement:
i. If the case involved in the application is pending
with the Appellate Tribunal or any Court;
ii. If the application involves determination of any
question having a bearing on the rate of tax or
determination of liability to pay tax on goods
and/or services;
iii. If the fees as prescribed has not been paid.
Q 10. Can the applicant withdraw his settlement
application once filed?
Ans. No. As per section 15 of IGST Act, once an application
has been made, it cannot be allowed to be withdrawn by
the applicant.
Q 11. What orders can be passed by the Settlement
Commission?
Ans. Settlement Commission shall pass an order providing
for terms of settlement which shall include:
i. the amount of tax, interest, fine or penalty that
is payable by the applicant (if this amount is
not paid within thirty days or a further extended
period of three months, it shall be recovered
along with interest as sums due to Central
Government in accordance with section 54 of
CGST Act ); (section 16)
ii. manner in which the sums due under the
settlement shall be paid; (section 16)
iii. granting immunity from prosecution for any
offence under the IGST Act if no proceedings for prosecution were instituted on the date of
receipt of the application and if the Settlement
Commission is satisfied that the applicant has
made a full and true disclosure of his tax liability;
(section 20)
iv. granting immunity from imposition of penalty either
in full or part under the IGST Act; (section 20)
v. Order provisional attachment of property of the
applicant during the pendency of any proceeding
before it. Such provisional attachment shall
cease to have effect, once sums due to the
Central Government for which attachment order
was made, stands discharged and the evidence
to this effect is submitted to the Settlement
Commission; (Section 17)
vi. Send a case back to the jurisdictional IGST
officer or the First Appellate Authority if it
is of the opinion that the applicant has not
cooperated with the Settlement Commission.
In such case, the relevant adjudicating
authority is entitled to use all material and
information produced by taxable person
before the Settlement Commission or the
results of an inquiry held by the Settlement
Commission; (section 21)
vii. Reopen any proceeding connected with the case
concluded earlier and pass appropriate order.
This can be done only after taking concurrence of the applicant and if five years have not expired
for the concluded proceeding , counting from the
date of application for Settlement. ( Section 18)
Q 12. What are the circumstances in which order of
Settlement Commission can be revoked?
Ans. (i) Order of Settlement Commission shall be
void if it is later found that it was obtained by fraud or
misrepresentation of facts. Thereafter proceedings covered
by the settlement shall stand revived from the stage at
which the application was allowed to be proceeded with by
the Settlement Commission and shall be concluded by the
relevant original or appellate authority within two years
from the date of receiving such communication from the
Settlement Commission. (Section 16)
(ii) Order of Settlement Commission granting immunity
from prosecution or payment of penalty can be withdrawn
where it finds later that the applicant had concealed any
facts or had given any false evidence or if he has failed
to pay the sum specified in the settlement order in the
prescribed time. (Section 20)
Q 13. Who cannot use Settlement Commission?
Ans. The following persons cannot avail of the facility of
Settlement Commission?
i. No person can avail the facility of settlement
more than twice. (section 23)
ii. A person cannot apply for settlement in
any other matter where after passing of a settlement order, a person was convicted of any
offence under the IGST Act in relation to that
case or where due to lack of cooperation from
the applicant, the Settlement Commission has
sent back the case to the relevant adjudicating
authority. (section 23)
Q 14. What are the powers of Settlement
Commission?
Ans. The powers and procedures of Settlement Commission
are given in sections 25 and 26 of IGST Act. It is vested
with the powers of a civil court under the Code of Civil
Procedure, 1908, for discovery and inspection, enforcing
the attendance of a person and examining him on oath,
and compelling production of books of account and other
records. Settlement Commission is deemed to be a civil
court for the purposes of section 195 of the Code of Criminal
Procedure, 1973. Any proceeding before it shall be deemed
to be a judicial proceeding under section 193 and 228 and
for the purpose of section 196, of the Indian Penal Code,
1860. The Settlement Commission also has the power to
regulate its own procedure.
Section 193 of IPC, 1860 contains penal provision for
giving false evidence during the proceedings and section
228 of IPC, 1860 contains penal provisions for intentionally
insulting or interrupting the Officer sitting in settlement
proceedings. Accordingly these provisions of IPC can be
invoked where the person gives false evidence or interrupts
the proceedings of the Settlement Commission.
Section 24 of the IGST Act gives power to Settlement
Commission to amend its order to rectify any mistake
apparent from the record within a period of three
months from the date of the order. Such mistake may be
noticed by the Settlement Commission on its own accord
or may be brought to its notice by the applicant or the
jurisdictional IGST officer. If a rectification has the effect
of enhancing the tax liability or reducing the quantum
of input tax credit, the applicant must be heard before
the order is passed.
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