Finmin against service tax panel

The finance ministry is not in favour of having a settlement commission for service tax.

In fact, the ministry is considering winding up the income tax and wealth tax settlement commission and revamping the customs and central excise commission to ensure that cases are decided within a fixed period of time.

"The ministry is not too happy with the time taken to deal with cases by the settlement commission. Since service tax is relatively new, the general view is that there is no need to have a settlement commission for the tax," a senior ministry official told Business Standard.

Industry associations like Assocham have been demanding setting up of a settlement commission in wake of the increase in the number of litigation cases under service tax. A review committee constituted by the customs and central excise settlement commission had favoured introduction of a provision for prosecution for offences in relation to service tax matters.

The basic objective of setting up a settlement commission is to avoid costly and time-consuming litigation and give an opportunity to tax-payers who may have evaded tax or duty to come clean.

As per the latest data available with the finance ministry, there are as many as 707 cases pending for admission with the income tax and wealth tax settlement commission up to January 2006. The number of admitted pending cases up to January 2006 was 2,826. During 2004-05, the total number of applications received was 434, which declined to 350 during April-January 2005-06.

The performance of the customs and central excise settlement commission is somewhat better. From 1999-2000 to 2005-06 (April-November), the commission received 4458 applications, of which 3715 were disposed of and duty amounting to Rs 624.19 crore was settled. While the income tax settlement commission was constituted in 1976, the customs and central excise settlement commission was constituted in 1999.