The Settlement Commission: A Comprehensive Guide to Its Role, Powers, and Functions
Introduction to Settlement Commission
The Settlement Commission, established under the Customs Act, 1962, provides an alternate dispute resolution mechanism for taxpayers. It allows for the resolution of tax disputes in a spirit of conciliation rather than litigation. The Commission’s decisions are based on the strength of bona-fide disclosure rather than through the process of assessment. It is more in the nature of arbitration than adjudication.
Legal Provisions for the Settlement Commission
The provisions for the Settlement Commission under the Customs Act are defined in Chapter XIV of the Act. Here are some key points:
- Section 127A: This section provides definitions for various terms used in the chapter. For instance, it defines a “Bench” as a Bench of the Settlement Commission, a “case” as any proceeding under this Act or any other Act for the levy, assessment, and collection of customs duty, among other definitions.
- Section 127B: This section allows any importer, exporter, or any other person to make an application, before adjudication, to the Settlement Commission to have their case settled. The application must contain a full and true disclosure of the applicant’s duty liability, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by the applicant, and other particulars.
- Section 127C (5): After receiving an application under Section 127B, the Settlement Commission examines the records and the report of the Commissioner of Customs. The Commission then gives an opportunity to the applicant and the Commissioner of Customs to be heard. After examining further evidence, the Commission may pass an order on the matters covered by the application and any other matter relating to the case.
- Section 127F: This section confers powers on the Settlement Commission. In addition to the powers conferred on the Settlement Commission under Chapter V of the Central Excise Act, 1944, it shall have all the powers which are vested in an officer of the customs under this Act or the rules made thereunder.
- Section 123: This section applies to goods that are seized under this Act in the reasonable belief that they are smuggled goods. The burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized.
Powers and Functions of Settlement Commission
The Settlement Commission has the power to grant immunity from prosecution and penalty under the Customs Act, 1962, if the applicant has made a full and true disclosure of his duty liability. The Commission also has the power to send a case back to the customs authority for further inquiry or investigation.
Here are some landmark cases regarding the Settlement Commission under the Customs Act:
- Case of Seized Goods under Section 123: The Supreme Court was called upon to decide whether a settlement remedy under Section 127B of the Customs Act, 1962, would be available for the seized goods, which are specified under Section 123 of the said Act. The bench of Krishna Murari and Sanjay Karol, JJ gave a split verdict and referred the matter to a larger bench. The case involved an NRI who was arrested under Sections 132 and 135 of the Customs Act, at the Delhi International Airport, for trying to smuggle high-value goods. The NRI was amenable to settle the dispute by approaching the settlement commission under Section 127 of the Customs Act, by paying the dues and any interest accrued thereon to the customs department in accordance with law.
- Settlement of Case under Section 127C (5): The Settlement Commission settled a case under section 127C (5) of the Act on the condition that the petitioner should pay Rs.49,54,921/-, the complete customs duty on all imported products including cigarettes. The order was given on 19.08.2014.
The Settlement Commission plays a significant role in the resolution of disputes under the Customs Act, 1962. It provides an alternate dispute resolution mechanism for taxpayers who wish to resolve tax disputes in a spirit of conciliation rather than litigation. The Commission’s decisions are based on the strength of bona-fide disclosure rather than through the process of assessment. It is more in the nature of arbitration than adjudication.