The
penal provisions under the Service Tax and the Central Excise has been
liberalised vide the Finance Act, 2015, effective from May 14, 2015,
whereby, in terms of the amended provisions, if an assessee is willing
to pay the duty/tax along with interest either before the issuance of
Show Cause
Notice (“SCN”) or within 30 days from the date of issue of
SCN, there shall be:No Penalty in case of Non-fraud cases;
Reduced Penalty equal to 15% of Duty/ taxes in fraud cases
However,
consequent to the amendments made to section 73, 76 and 78 of the
Finance Act, 1994 (“the Finance Act”) and section 11AC of the Central
Excise Act, 1944, (“the Excise Act”) vide the Finance Act, 2015, field
formations have sought certain clarifications with regard to detections
made during audit, investigation or scrutiny.
Keeping in mind the
need to reduce litigation as well as paperwork and compliance
formalities, the Central Board of Excise and Customs (“CBEC” or “the
Board”) vide Instruction F. No. 137/46/2015-ST dated August 18, 2015 has
issued following clarification as under:A. Waiver of issuance of SCN
On assesses’ request for an informed waiver of a written SCN
In a case involving the extended period of limitation, if an assessee pays the tax/duty amount, interest and penalty equal to 15% of the tax/duty and makes a request in writing for non-issuance of written SCN,then in such cases the SCN can be oral and the representation (if he desires) against it also be oral.
The
principles laid down by the Hon’ble Supreme Court in the case of
Commissioner of Customs, Mumbai Vs. Virgo Steels [2002 (4) TMI 53 -
SUPREME COURT OF INDIA] while dealing with section 28 of the Customs
Act, 1962 (“the Customs Act”) by holding that “From the ratio laid down
by the Privy Council and followed by this Court in the above cited
judgments, it is clear that even though a provision of law is mandatory
in its operation if such provision is one which deals with the
individual rights of person concerned and is for his benefit, the said
person can always waive such a right.”, are equally applicable to SCNs
issued under other statutes.
section 124 of the Customs Act, 1962
dealing with confiscation of goods/ imposing penalty, also provides that
the Notice and the representation may, at the request of the person
concerned, be oral. This provision has been made applicable to the
Excise Actvide Notification No. 68/63-CE dated May 4, 1963 issued under
section 12 of the Central Excise Act. 1944. The said Section of the
Excise Act is also applicable to Service tax vide section 83 of the
Finance Act, 1994.On assesses’ written intimation of being informed about the grounds, quantification and his acceptance thereof
If the grounds on which the Department feels that there has been short/non-payment of tax/duty are intimated to the assessee orally with its quantification and the assessee indicates in writing that he has been informed about such grounds and he accepts the grounds and the quantification and is waiving the requirement of a written SCN, then a written SCN need not be issued.
30 day period to be computed from the date of receipt of such letter by the Department
In
terms of section 78 of the Finance Act, 1994 and Section 11AC of the
Central Excise Act. 1944, 30 days period within which the assessee may
make the payment of tax/duty, interest and reduced penalty of 15%, is
computed from the date of service of SCN.In case the assessee makes a written request for waiver of a written SCN, the 30 days period can be computed from the date of receipt of such a letter by the Department.
No bar on payment even before the receipt of such letter by the Department
There is no bar on an assessee making the payment of tax/duty, interest and reduced penalty of 15% even before the date of receipt of such a letter by the Department.
B. Conclusion of Proceedings
The officers of DGCEI/Executive Commissionerate/Audit Commissionerate can close the case.
The sum total involved in all the issues arising from the same proceedings should be considered for conclusion of proceedings, in case of multiple issues with different monetary values arising from the same proceeding.
The intimation for such conclusion shall be given in writing to the assessee.
No need to issue of an adjudication order or to undertake review of such conclusion of proceedings.
Provisions
under section 73(3) of the Finance Act, 1994 and section 76 (i) thereof
have to be read harmoniously to conclude that in non-fraud cases, if
the assessee pays the tax along with interest, either within 30 days of
issuance of SCN or before issuance of SCN, then in such cases
proceedings shall be deemed to be concluded.
Legal provisions for
similar closure under the Central Excise are present in clause (a) of
sub-section (1) of section 11 AC of the Central Excise Act, 1944.Conclusion:
Even
though the Board has attempted to reduce the litigation by issuing
clarification as to waiver of issuance of SCN and/ or conclusion of
proceedings, however the moot question still remains as to when a case
should be categorised by the Department as a Non-fraud case. The
Department follows stereotype practice in most cases of always alleging
fraud, suppression etc., while alleging demand on assessees. Then, under
what circumstances, can an assessee avail the benefit of no penalty on
payment of tax along with interest, either within 30 days of issuance of
SCN under section 76 of the Finance Act, 1994 or before issuance of SCN
in terms of section 73(3) thereof.
If the Board is really inclined towards reducing the quantum of litigation in the Country, some sort of clarification must also be issued in this regard as well.
To view the compete Instruction, please click on the link below:
Instruction F. No. 137/46/2015-ST dated August 18, 2015
Hope
the information will assist you in your Professional endeavours. In
case of any query/ information, please do not hesitate to write back to
us.
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