Notices, SCNs and Appellate Proceedings INTERNATIONAL TAX CA. GROUP New Delhi December 13, 2014 INTERNATIONAL TAX CA. GROUP New Delhi December 13, 2014

Notices, SCNs and Appellate Proceedings

Notices, SCNs and Appellate Proceedings

INTERNATIONAL TAX CA. GROUPNew Delhi

December 13, 2014

INTERNATIONAL TAX CA. GROUPNew Delhi

December 13, 2014

Presented by:CA Gaurav Gupta FCA, LLB, DISA

PartnerMGS & Co.Author – Service Tax – Law & Practise

Notices – Proceedings under Service Tax

Notices – Proceedings under Service Tax

Notices

Assessee is responsible

to

Preventive / Anti Evasion

Assessment

Audit / Special Audit /

CAG

CERA

DGCEI

Notices

• Notices may be sent for:– Jurisdictional – Investigate

• Key provisions relating to above:

– Section 14 of Central Excise Act– Section 37C of Central Excise Act– Section 82 of Service Tax Act (Finance Act, 1994)– Rule 5A of Service Tax Rules, 1994

Penalties and Proceedings MGS & Co. 4

Notices

• Summons

• Mode of Service

• Access to registered premises

• Investigation

• Audit


Notices

• Summon - Section 14 of Central Excise Act

Power to summon persons to give evidence and produce documents in inquiries under this Act. — (1) Any Central Excise Officer duly empowered by the Central Government in this behalf, shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purposes of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.(2) All persons so summoned shall be bound to attend, either in person or by an

authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required :Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to requisitions for attendance under this section.

(3) Every such inquiry as aforesaid shall be deemed to be a “judicial proceeding” within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860 (45 of 1860).


Notices

• Summon– To be issued by any Central Excise Officer – Power to summon any person whose attendance he considers

necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purposes of this Act.

– To produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.

– All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required.

– Considered as judicial proceedings as per CPC– Summons issued on spot valid - Anghinghu Nice Tobacco [2013

(298) E.L.T. 570 (Tri. - Chennai)]


Notices

• Summon - Instructions vide Circular No. 137/39/2007-CX dated 26.2.2007– (a) For calling for information/documents, normally the mode of

communication should be either in the form of a telephone call or by way of sending a simple letter;

– (b) Issuance of summons should be resorted to, only when the above mentioned modes of communications are found to be ineffective or are likely to jeopardize revenue interest or when it is essential to ensure personal presence of the person concerned to tender evidence or record statement in connection with a service tax evasion case;

– (c) In cases mentioned under (b) above, the summons should be issued after obtaining prior written permission from an officer not below the rank of Deputy Commissioner with reasons in writing;

– (d) In case, for unavoidable operational, oral/telephonic permission from such officer must be obtained and the same should be reduced to writing at the earliest opportunity;

– (e) In all cases, the officer must submit a report on proceeding that took place during the presence of the taxpayer/person summoned, and the officer authorizing issuance of summons must satisfy himself that no harassment has been caused during the visit of the person summoned to the office.

Notices

• Mode of Service - Section 37C of Central Excise ActService of decisions, orders, summons, etc. — (1) Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served, -(a) by tendering the decision, order, summons or notice, or sending it by registered post

with acknowledgment due [or by speed post with proof of delivery or by courier approved by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] to the person for whom it is intended or his authorised agent, if any;

(b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended;

(c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.

(2) Every decision or order passed or any summons or notice issued under this Act or the rules made thereunder, shall be deemed to have been served on the date on which the decision, order, summons or notice is tendered or delivered by post [or courier referred to in sub-section (1)] or a copy thereof is affixed in the manner provided in sub-section (1).]


Notices

• Mode of Service– Section 37C provides for the mode– Section 37C contemplate the service of the

order/decision/sum on/notice firstly by tendering, i.e. in other words by hand delivering to the assessee. In case such hand delivery is not possible then the order/ decision/ summon/ notice has to be sent by registered post.

– Since, both the sections provide for alternate service of the order/decision/summon/notice in the failure of service by sub-section (a), it would mean that the order/decision/summon/ notice has to be made known to the assessee.

– If the show cause notice has been served on the party within a period of six months/one year, as the case may be, from the date of payment of duty, the demands would be valid and sustainable. The decision of the Larger Bench of this Tribunal in the case of Margra Industries Ltd. [2006 (202) E.L.T. 244 (Tri.-LB) = 2008 (10) S.T.R. 81 (Tri.-LB)] also supports this view.


Notices

Mode of Service• Margra Industries Ltd. [2006 (202) E.L.T. 244 (Tri.-LB)• Provisions of Section 27 of the General Clauses Act, 1897 would apply in

all cases:“27. Meaning of service by post. - Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression “serve” or either of the expressions “give” or “send” or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

• The said section no doubt creates a fiction of deemed service if the conditions of addressing, pre-payment and posting by registered post are complied with, but the said section also has implied meaning that this presumption has to be construed if and if only “ then unless a different intention appears” from the Central Act or Regulation.


Adjudication ProceedingsAdjudication Proceedings

Stages of Adjudication

• Any proceedings for recovery of Service Tax involves three stages:– Conduct of an Enquiry– Issuance of Show Cause Notice– Issuance of Order against such Show Cause Notice

• Order only is appealable and not Show Cause Notice



• Requisites of a Adjudication order

– Service of a proper Show Cause Notice – Provision of documents relied upon for issuance of such Show Cause Notice – Proper opportunity of being heard– Decision to be based on those grounds which forms part of Show Cause

Notice – Order must be a speaking order



• Provision of documents relied upon for issuance of such Show Cause Notice

o Every person before an Authority exercising the adjudicatory powers has a right to know the evidence to be used against him.

o This principle is firmly established and recognized by this Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income Tax, West Bengal - (1955) 1 SCR 941.

o In the case of Tribhuvandas Bhimji Zaveri&Anr. v. Collector of Central Excise [(1997) 11 SCC 276] the Apex court held that the failure to supply important piece of information to the appellants has prejudiced the appellants and to this extent the principles of natural justice would stand violated.

o In the case of CCE v Wearwell Tyres & Tubes P. Ltd. [2009 (244) ELT 309 (Tri-Del.)], it was held that Allegation in the show cause notices were based on documents whose authenticity was not tested by questioning the concerned persons.



• Proper opportunity of being heard

o If proper opportunity of being heard is not afforded to assessee, then, order passed by the Adjudicating Authority shall be in violation of principle of natural justice, such an order would be nullity in law.

o The trite rule of law has been upheld in the case of CST, Delhi v World Vision [2011 (24) S.T.R. 650 (Del.)]. In the case of Kanda v. Government of Malaya - [1962] AC 322], Lord Denning has added: “If the right to be heard is to be a real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence is given and what statements have been made affecting him: and then he must be given a fair opportunity to correct or contradict them”



• Decision to be based on those grounds which forms part of Show Cause Notice

It is an established principle of law that no demand can be raised on grounds other than those provided in the Show Cause Notice. An Order which travels beyond the scope of show cause notice is bad in law and against the principles of natural justice. order which sustained the rejection of refund claim as well as the demand relying on a ground not cited in the show cause notice is not sustainable. o Saci Allied Products Limited, U.P. v. Commissioner of Central Excise,

Meerut [ 2005 (7) SCC 159]o Coramandel Fertilizers Ltd. v. CCE, Chennai - 2009 (13) S.T.R. 542

(Tribunal-Chennai)o Mahakoshal Beverages Pvt. Ltd. v. CCE, Belgaum - 2007 (6) S.T.R. 148

(Tribunal-Bang.)o Aurobindo Pharma Ltd. v. CCE & C, Visakhapatnam - 2008 (10) S.T.R.

611 (Tri.-Bang.)o CCE v. Ballarpur Industries Ltd. [2007 (215) E.L.T. 489 (S.C.)]



• Speaking order

Indian courts have insisted on rigorous compliance with the requirement of recording of reasons and communication thereof by every quasi-judicial authority. An unreasoned and cryptic order is liable to be quashed. Some of the judicial precedents, which can appropriately be cited to support the above-mentioned proposition, are:o Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala [AIR 1961 SC

1669]o Bhagat Raja v. Union of India [AIR 1967 SC 1606]o Travancore Rayons Ltd. v. Union of India [AIR 1971 SC 862]o Mahabir Prasad Santosh Kumar v. State of U. P. [AIR 1970 SC 1302]o Woolcombers of India Ltd. v. Woolcombers Workers Union,[AIR 1973 SC

2758]o Ajantha Industries v. CDBT [1976 (102) I.T.R. 281 (SC)] o Siemens Engineering and Manufacturing Co. of India Ltd. v. UOI [AIR

1976 SC 1785]o S. N. Mukherjee v. Union of India [AIR 1990 SC 1984]Penalties and Proceedings MGS & Co. 18


• Time Bound Adjudication

Section 73 is being amended to prescribe time limits for completion of adjudication as already exists in Central Excise. This time limit would need to be followed, as far as possible. Time limit as prescribed is as follows:

A. In case of notice issued within eighteen months (without extending limitation) - Within six months from the date of notice

B. In case of notice issued evoking the extended period of five years - Within one year from the date of notice

However, the section provides the limit with the words – “where it is possible to do so”. Thus, the option for closing order beyond the prescribed period remains with the assessing officer.


Drafting Reply to SCNsDrafting Reply to SCNs

SCNs

• Important elements of SCNs– Subject issue– Interest– Penalties

• In respect of Show Cause Notice, the following points are worth mentioning:– Mere issue of Show Cause Notice is not sufficient, it has to be served

on the person.– Refusal to accept Show Cause Notice is due service of notice.– In case of partnership firm, Show Cause Notice can be issued to any

partner.– In case of company, Show Cause Notice can be issued to any of

director, secretary or principal officer– Notice served to to agent is valid.


Subject Issue

• Subject Issue

– Service / Reverse Charge / Cenvat credit

– Service or not

– Classification

– Valuation

– Limiatation


Interest

• Section 75 of the Finance Act, 1994 provides that every assessee who fails to discharge his service tax liability is required to pay simple interest at a rate not below 10% and not exceeding 36% per annum.

• Notification No. 12/2014-ST, dated 11th July, 2014 provides following rates:


Sl. No.

Period of delay Rate of simple interest

(1) (2) (3)

1. Up to six months 18 per cent.

2.More than six months and up to one year

18 per cent. for the first six months of delay and 24 per cent. for the delay beyond six months.

3. More than one year18 per cent. for the first six months of delay; 24 per cent. for the period beyond six months up to one year and 30 per cent. for any delay beyond one year.

Interest

• Second proviso to section 73B, as inserted by the Finance Act, 2011, provides that in case of those service providers whose value of taxable service provided in a financial year does not exceed sixty lakhs rupees during any financial years covered under section 73A (3) or during the last preceding financial year, as the case may be, then the applicable rate shall be reduced by three per cent per annum and thus, effective rate of interest in such cases would be 15% per annum.

• Mr X fails to pay Service Tax of Rs 10 Lakhs due on October 1, 2014 and pays the same on December 1, 2015, his interest shall be computed as under:

Total delay in payment : 14 monthsInterest for first six months: 10,00,000 x 18% x 6/12 (months) = 90,000Interest for next six months: 10,00,000 x 24% x 6/12 (months) = 120,000Interest for next two months: 10,00,000 x 30% x 2/12 (months) = 50,000Total interest payable : Rs 260,000


Interest

• Interest is payable for a period time and at the rates as applicable during such period when such amount had remained unpaid.

• Is payment of interest mandatory?

• Is interest payable on Service Tax liability which is available as Cenvat Credit?


M J Exports (P.) Ltd. v. UOI [2006 (202) ELT 583 (Bom.)].

Commissioner of Central excise V/S Hemant N Talekar:- (2012) 18 taxmann.com 43

Indoworth (India) (P.) Ltd. v. Commissioner of Customs & Central Excise, Nagpur [2012] 27 taxmann.com 279 (Bom.)

Interest

• Is Interest mandatory in cases of retrospective amendments:

• Can Interest be demanded beyond 18 months if extended period cannot be evoked.


Star India Pvt Ltd. [2006 (1) S.T.R. 73 (S.C.)]

Jai Bharat Maruti Ltd. v CCE [2014] 50 taxmann.com 224 (Punjab & Haryana)

PenaltiesPenalties

Penalties

• Section70, 76, 77, and 78 of Finance Act, 1994 provide for penalties in cases of Service Tax.

• Section 70 – Penalty for delay in filing of return

The maximum penalty for delay in filing of return under section 70 has been increased from Rs.2,000/- to Rs.20,000/-.

Period of delay PenaltyLess than or upto 15 days Rs 500/-More Than 15 days but less than 30 days

Rs 1000/-

More than 30 days Rs 1000 plus Rs 100 per day from 31st day till the date of furnishing the return subject to maximum of Rs 20,000/-


Penalties

• Section 76: Penalty for failure to pay service tax

Penalty upto 7-4-2011Penalty w.e.f. 8-4-2011

Higher of:1. Rs.200/- per day; or2. 2% of service tax for every monthSubject to maximum of the service tax liability

Higher of:1. Rs.100/- per day; or2. 1% of service tax for every monthSubject to maximum of 50% of the service tax liability


Penalties

• Section 77: Certain defaults and Penalties

Failure to Penalty upto 7-4-2011 Penalty w.e.f. 8-4-2011Get registration Higher of:

1. Rs.5,0002. Rs.200 per day starting from

the first day after the due date till actual compliance date

Higher of:1. Rs.10,0002. Rs200 per day starting from


However Finance Bill, 2013 has provided for a flat penalty of Rs 10,000/- and has proposed to remove the per day penalty.

Maintain or retain books of account or documents

Upto Rs.5,000 Upto Rs.10,000

Pay tax electronically when required



Penalties

• Section 77: Certain defaults and Penalties

Failure to Penalty upto 7-4-2011 Penalty w.e.f. 8-4-2011Furnish information/produce documents/appear before Central Excise Officer, when called





Account for an invoice or in case of incomplete invoices


Any other contravention Upto Rs.5,000 Upto Rs.10,000


Suppression of the value of taxable services

100 % of tax sought to be evaded.

The abovementioned penalty will be reduced to 50% of tax sought to be evaded if the taxpayer has exhibited true & complete information in the specified records.

The abovementioned penalty will be reduced to 25% of tax sought to be evaded if the taxpayer has deposited the servIce tax and interest within 30 days from the date of communication of order.

Further period of 30 days shall extended to 90 days if service tax liability of dealer do not exceed 60 lakhs

• Section 78: Deliberate evasion

Penalties


S. No. Central Excise Officer Amount of Service Tax or CENVAT credit specified in a notice for the purpose of

adjudication.

(1) (2) (3)

(1) Superintendent of Central Excise Not exceeding Rs. one lakh (excluding the cases relating to taxability of services or valuation of services and cases involving extended period of limitation.)

(2) Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise

Not exceeding Rs. five lakhs (except cases where Superintendents are empowered to adjudicate.)

(3) Joint Commissioner of Central Excise

Above Rs. five lakhs but not exceeding Rs. fifty lakhs

(4) Additional Commissioner of Central Excise

Above Rs. twenty lakhs but not exceeding Rs. fifty lakhs

(5) Principal Commissioner / Commissioner of Central Excise

Without limit.

Penalties


• Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required to be established.

• Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression.

• Mere Contravention not sufficient. Contravention necessarily has to be with intent to evade payment of Service Tax.


1989 (40) E.L.T. 276 (S.C.)CHEMPHAR DRUGS & LINIMENTS

INFINITY INFOTECH PARKS LTD - 2013 (31) S.T.R. 653 (Cal.) - .

Continental Foundation JT. Venture 2007 (216) E.L.T. 177 (S.C.)

Penalties

• In case of conflicting views, it cannot be said to be deliberate evasion

• No amount can be recovered if not specified in SCN.

• No intent to fraud or collude where assessee was under a bonafide belief.


2012 (26) S.T.R. 101 (Chhattisgarh)BHARAT ALUMINIUM CO. LTD.

Padmini Products Vs. CCE 1989 (43) ELT 195 (SC) and Tamil Nadu Housing Board Vs. CCE 1994 (74) ELT 9 (SC)

[Refer Gujrat Containers Ltd. Vs. CCE 2003 (157) ELT 67 (Tri-Mum) and Metal Forgings Vs. UOI 2002 (146) ELT 241 (SC)].

Penalties

Appeals – Drafting and StayAppeals – Drafting and Stay

SECTION 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal. — The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal —(i) under sub-section (1) of section 35, unless the appellant has

deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the [Principal Commissioner of Central Excise or Commissioner of Central Excise];

(ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent.

Basic Concepts


ORDER PASSED BY

APPELLATTE AUTHORITY

% OR DUTY AND / OR PENALTY REQUIRED AS PRE

DEPOSIT

Any officer of a rank lower than Commissioner of Central Excise

Commissioner (Appeal)

7.5% (Maximum of Rs. 10 Crores)

Commissioner of Central Excise

CESTAT 10% (Maximum of Rs. 10 Crores)

Commissioner (Appeal)

CESTAT 10% (Maximum of Rs. 10 Crores)

Pre Deposit before Appeals


Certain important Points

• Pre-deposit is to be computed as under:– As %age of the duty, in case where duty or duty and penalty

are in dispute

– As %age of penalty, where such penalty is in dispute

• No stay proceedings required – automatic stay

• Pre-deposit of 7.5% and 10% considered separately by TRU



• Vide Circular No. CIRCULAR NO. 984/08/2014-CX, dated September 16, 2014, CBEC has clarified many points in relation to the amended Section 35F requiring predeposit before submission of an appeal before first and second appellate authorities. Such clarifications are as under:– The amended provisions apply to appeals filed after 6th August, 2014.– Interest to be paid at the rate of 6% in cases where such pre-deposit is

made and later required to be refunded to assessee. However, no interest shall be paid on predeposit made in excess of amount required as pre deposit

– In case of demand and penalty, in the event of appeal against the order of Commissioner (Appeal) before the Tribunal, 10% is to be paid on the amount of duty demanded or penalty imposed by the Commissioner (Appeal). It is clarified that since ‘or’ has been used, 10% of either amount is to be deposited and duty shall get preference over penalty for predeposit.

– In a case, where penalty alone is in dispute and penalties have been imposed under different provisions of the Act, the pre-deposit would be calculated based on the aggregate of all penalties imposed in the order against which appeal is proposed to be filed.



– Payment made during the course of investigation or audit, prior to the date on which appeal is filed, to the extent of 7.5% or 10%, subject to the limit of Rs 10 crores, can be considered to be deposit made towards fulfillment of stipulation under Section 35F of the Central Excise Act, 1944

– Date of filing of appeal shall be deemed to be the date of deposit and interest on refund shall be applicable from such date only

– In case of short payment, appeal can be rejected.– No coercive measures for the recovery of balance amount i.e., the

amount in excess of 7.5% or 10% deposited in terms of Section 35F of Central Excise Act, 1944 or Section 129E of Customs Act, 1962, shall be taken during the pendency of appeal where the party/assessee shows to the jurisdictional authorities:

– (i) proof of payment of stipulated amount as pre-deposit of 7.5%/10%, subject to a limit of Rs.10 crores, as the case may be; and

– (ii) the copy of appeal memo filed with the appellate authority.– Demand recoveries can be made in between date of order and deposit

of appeal to next forum with requisite redepositPenalties and Proceedings MGS & Co. 41


– If the Department contemplates appeal against the order of the Commissioner (A) or the order of CESTAT, which is in favour of the appellant, refund along with interest would still be payable unless such order is stayed by a competent Appellate Authority

– It is clarified that refund of pre-deposit made should not be withheld on the ground that Department is proposing to file an appeal or has filed an appeal against the order granting relief to the party

– Challan to be presented along with appeal and details thereof to be provided in column 6 of ST-4 or other applicable columns in case of CESTAT.

– No special format for refund application of predeposit amount. A simple letter from the person who has made such deposit, requesting for return of the said amount, along with a self attested Xerox copy of the order in appeal or the CESTAT order consequent to which the deposit becomes returnable and attested Xerox copy of the document evidencing payment of such deposit would suffice for refund of the amount deposited along with interest at the rate specified.


Appeal Before Commissioner (Appeals)

• Section 84 – Even the department can file an appeal to CCE (A) against orders of adjudicating authorities lower then CCE.

• CCE to review the order and direct any CEO for filing the appeal to CCE (A).

• Aforesaid review order to be passed within 3 months from the date of communication of the order.

• Appeal to be filed by the authorised officer within one month from the date of communication of order of CCE.

• Assessee may challenge the departments appeal on limitation if there is delay in reviewing the order or filing of appeal.



Section 85 – Any assessee aggrieved by the order of any adjudicating authority subordinate to CCE may file appeal to CCE(A).

Appeal to be filed in prescribed format – ST 4 in Duplicate.

Appeal to be signed and verified by authorized person.

Appeal to accompany self certified copy of order-in-original.

Power of attorney should preferably be submitted along with appeal.

No filing fee.



Please Ensure

• St-4 is to be filed in duplicate • Accompanied by order of adjudicating authority being appealed

(original or attested copy) • Form to be verified in prescribed manner • To be accompanied by statement of facts and grounds of appeal • To be signed by appellant or his authorized representative.• To be dated

Other points to be considered

• Attach power of attorney • Prepare a index of papers / documents submitted• Number the pages annexed.• List out cases referred to / relied upon



Appeal to be filed within 2 months from date of receipt of order (time reduced from 3 months to 2 months by Finance Act 2012 w.e.f. 28-05.2012).

Time limit for all orders received upto 28-05-2012 shall continue to be 3 months.

Appeal may be on any issue relating to Service Tax(Short levy, non levy, taxability, classification), interest or penalty.

In case of delay in filing the appeal, condonation application has to be filed.


• CCE may condone delay up to 1 month (earlier this period was three months) [Proviso to Sec 85(3A)]

• CCE has no power to condone delay beyond prescribed period.

• All appeals to CCE (A) to accompany with application for dispensing with pre-deposit of tax, penalty and interest (Section 83 of F.A 1994 read with section 35F of Central Excise Act 1944).




Opportunity for personal hearing on

Appeal. Must be specifically

Asked (Section 35A of CEA-1944)

Maximum 3 adjournments. (Section 35 of CEA-1944)

Commissioner may allow to

raise ground not mentioned in appeal if is

satisfied that the omission

was not wilful or unreasonable.

Written Submission.



Section 85 (4) : The Commissioner of Central Excise (Appeals) shall hear and determine the appeal and, subject to the provisions of this Chapter, pass such orders as he thinks fit and such orders may include an order enhancing the service tax, interest or penalty :

Provided that an order enhancing the service tax, interest or penalty shall not be made unless the person affected thereby has been given a reasonable opportunity of showing cause against such enhancement.


APPEAL TO APPELLATE TRIBUNAL

• Section 86:- Any assessee aggrieved by an order passed by a Commissioner of Central Excise under section 73 or section 83A or an order passed by a Commissioner of central excise (Appeals) under Section 85, may appeal to Appellate Tribunal against such order .

• Appeal to be filed within 3 months from date of receipt of order.

• Customs, Excise and Service Tax Appellate Tribunal (CESTAT)]o Highest fact finding authorityo Appeal to be in the prescribed form [(ST-5) Rule 9 of Service

Tax Rules]o Signing of appeal o Board resolutiono Affidavit in support of petition for waiver of duty/tax/penalty


Where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is

Amount of Fees

Five lakh rupees or less. One thousand rupees

More than five lakh rupees but not exceeding fifty lakh rupees.

Five thousand rupees

More than fifty lakh rupees Ten thousand rupees

Every application for grant of stay or ROM or ROA

Five Hundred rupees



The Department can also file appeal to CESTAT against an order of adjudicating authority (Commissioner) or CCE (Appeals)

Appeal has to be in prescribed form [(ST-7) Rule 9 of Service Tax Rules]

The Board may constitute a committee comprising of two Chief Commissioners or two Commissioners of Central Excise.

In case of difference of opinion Board to decide whether order passed by Commissioner or Commissioner (Appeals) is legal and proper or not whether appeal to CESTAT has to be filed or not.

Appeal to be filed within 4 months from the date the order is received by the Committee.

Both the parties can file memorandum of cross-objections within 45 days of receipt of notice. [(ST-6) Rule 9 of Service Tax Rules]

The Tribunal to dispose of cross-objections as if it were an appeal presented before it. [Refer Section 86(4) of Finance act,1994]


Both the parties can file memorandum of cross-objections within 45 days of receipt of notice. [(ST-6) Rule 9 of Service Tax Rules]

The Tribunal to dispose of cross-objections as if it were an appeal presented before it. [Refer Section 86(4) of Finance act,1994]

Maximum Three Adjournments [Section 35C(1A)]

SECTION 35C. — The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary.



Certain Important Points

• Provision of (RUD’s) documents forming basis of Show Cause Notice is a must [Refer 1997 (92) E.L.T. 467 (S.C.) Tribhuvandas Bhimji Zaveri Vs. CCE And Rahul Dravid Vs Commissioner Of Service Tax, Bangalore 2012 (28) S.T.R. 593 (Tri. - Bang.)]

• Cross-examination of the persons, whose statements have been relied upon by the Department has to be allowed [Parmarth Iron Pvt. Ltd. Vs. CCE-I 2010 (20) S.T.R. 705 (All.)]

• Mere issue of SCN is not sufficient, it has to be served on the person as per Section 37C of the Central Excise Act, 1944.

• Amount of tax demanded and basis thereof should be clearly specified. [Refer Metal Forgings Vs. UOI 2002 (146) ELT 241 (SC)].


Certain Important Points

• Category under which tax has been demanded must be clearly indicated in the SCN [Refer Coromandel Fertilizers Ltd. Vs. CCE 2009 (13) S.T.R. 542 (Tri - Chennai)].

• Demand of duty without issuance of SCN is not sustainable. [Refer CCE Vs. Akay Cosmetics Pvt. Ltd. 2005 (182) ELT 294 (SC)].

• Extended period can not be invoked where department had erlier issued an SCN for the same issue . [Refer Cairn Energy India Pvt. Ltd. Vs. CCE 2008 (11) STR 632 (Tri-Bang.)].

• Extended period can not be invoked where assessee had been regularly furnishing its ST- 3 returns, which were assesed and finalized by the department. [Refer Alvares & Thomas Vs. CCE 2009 (13) STR 516 (Tri-Bang.)].


Limitation for Demand

The period of 18 months / 5 years is computed with reference to a ‘relevant date’, which is defined in Section 73(6) as follows:

Situation Relevant date

Filing of a return Date of filing the return

Non-filing of a return The last date on which such return is to be filed

Provisional assessment of service tax

The date of adjustment of the Service Tax after the final assessment

Erroneous refund of service tax.

The date of such refund

Any other case Date on which service tax has to be paid


Special Points

Adjudication – Order-in-Orignal

Normal period to sustain in case extended period is not sustained before the court (the provision are effective from 10th May 2013.


Condonation of AppealsCondonation of Appeals

Condonation –

- Power to condone provided to various authorities -

- No power to condone beyond prescribed period – Singh Enterprises [2008 (221) E.L.T. 163 (S.C.)]

- Not an absolute right of the assessee -

- Day by day delay to be explained

Condonation


Condonation

Hon’ble Supreme Court in the case of N. Balakrishnan v. M. Krishnamurthy - 2008 (228) E.L.T. 162 (S.C.) as to that for a mistake due to advocate, the assessee should not be put to hardship by way of rejection of his appeal, having not filed within time.

Hon’ble Court had held as under: “It must be remembered that in every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. While condoning the delay, the court should not forget the opposite party altogether. It must be borne in mind that he is a loser and he too would have incurred quite large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant, the court shall compensate the opposite party for his loss.”


Condonation

GANESH AGRO PACK (P) LTD v CCE, Madurai [2002 (149) E.L.T. 1455 (Tri. - Chennai)], wherein similar relief for inadvertent mistake was given to the Assessee as under: “Therefore this is a case where there was no effective opportunity as envisaged under law given to the appellants to put forth the appellant’s pleas. The learned Counsel further submitted that to prove the bona fide the Counsel himself has filed an affidavit and it was urged that the averments of the affidavit are not contravened to the Department. The learned Counsel therefore submitted that by reason of a bona fide mistake in taking the adjournment date wrongly, the Counsel could not be present and therefore in the above circumstances if the order is not recalled and the matter re-heard the party would suffer irrepairable harm and injury in addition to the fact that there was no representation at all on the side of the appellant.”


Condonation

in the case of Janakkumar C. Naik v.Commissioner of Central Excise, Daman, (2014) 45 taxmann.com 193 (Ahmedabad - CESTAT), wherein it was held that in the absence of application seeking condonation of delay, the Commissioner Appeal should inform the assessee to file an application for condonation of delay before dismissing the appeal on the ground of it being barred by limitation. The Ahmedabad CESTAT observed that though the appeal has been filed after the statutory period of two months and no application for condonation of delay has been filed but the appellate authority should have informed the assessee to file an application for condonation of delay. Moreover, the delayed period also lies within the power vested with the appellate authority in terms of proviso to Section 85(3A) which provides that the Commissioner (Appeals) has the power to condone the delay by a further period of one month subject to the condition that the appellant was prevented by sufficient cause from filing the appeal. Therefore, the appeal could not be rejected merely on non-filing of application for condonation of delay.


Condonation

Commissioner of Auraya Central Excise v. Chamber of Commerce - 1986 (25) E.L.T. 867 (S.C.) and Suksha International and Nutan Gems and Others - 1989 (39) E.L.T. 503 (S.C.) holding that substantive benefits cannot be denied for procedural lapses and where reasonable/relatable other evidences exist in favour of allowing the substantive relief.


Disclaimer

This presentation has been prepared for internal use of ICAI and its members. The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. The presentation is made with utmost professional caution but in no manner guarantees the content for use by any person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the matter given. The presentation is meant for general guidance and no responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this presentation will be accepted by us. Professional advice recommended to be sought before any action or refrainment.

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Documents

Notices, SCNs and Appellate Proceedings INTERNATIONAL TAX CA. GROUP New Delhi December 13, 2014 INTERNATIONAL TAX CA. GROUP New Delhi December 13, 2014