Extended time limit u/s 11a(2) for audit demand

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 September 2011 Audit completed - 22 Jan 2009; Observations Conveyed to Assessee for compliance - 05.3.2009; Audit Demand paid (under Protest) - 21.10.2010;
Show cause notice for much higher (4-times) than audit demand issued - 09.11.2010; Replied - 09.12.2010; Personal Hearing - 25.01.2011;
Order-in-Original signed - 26.07.2011; Adjudication Order served - 13.08.2011;

Can extended period, u/s 11A(1)-provisio, be invoked ? What is provisio to 11A(2) - how do these two provisios differ ?

Can Audit determined demand be enhanced on other accounts like inclusion of freight charges in assessable value though sale cmpleted at factory gate through Buyers' agent (transporter) issuing Goods Receipt showing Buyer as Consignee ?

How could 100% penalty under 11AC and Interest u/s 11AB be justified ?

Any relevant citation against the Deptt. ?

U S Sharma

U S Sharma (Expert)
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05 September 2011 11AC and 11AB is much in favor of department when concealement or evasion is recorded by department,

if the assesee had to meet the tax payment at the audit stage ( not after issue of audit demand) then 11AB may had to get relaxed, on the ground of ignorance and payment as soon as it is noticed with department help.

if freight charges are borne by the factory of despatch then it might get added to assessable value.

depending upon the value of case booked, the same would move upto addl comm level, and would get slight relief under CEGAT. (for 11AB only)

you have to get help of any high end advisor of consultant who is capable to produce the case upto cegat bench stage.

U S Sharma

U S Sharma (Expert)
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05 September 2011 11A(1) represents the period of pre audit or period wen the department takes notice of such event.

11A(2) represents the period after issue of notice or scn.

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Querist : Anonymous

Querist : Anonymous (Querist)

05 September 2011 Deptt having taken note of Audit observation on 27.02.2010 and notified Assessee to comply on 05.03.2010, the SCN could be issued only with one year thereof; Is it not ?

SCN (for much more than Audit demand) issued on 09.11.2010 after written intimation of payment of Audit demand on 21.10.2010 (undee protest)had been received by Deptt.

Personal hearing on 25.01.2011 but Order-in-original signed as 26.07.2011 was served only on 13.08.2011 confirming SCN demand u/s 11A(2), interest u/s 11AB , 100% Penalty u/s 11AC, invoking extended
period u/s 11A(1) provisio;

Pls. provide suiable citation in the matter for help before CCE(Appeal)

U S Sharma

U S Sharma (Expert)
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06 September 2011 when the case of evasion is traced by the department, SCN service only is limited within 1 year, balance is the procedure without any time limit.

Querist : Anonymous

Querist : Anonymous (Querist)

09 September 2011 As the SCN was issued / served only after 1 year of the Audit report issued / received / taken note of by the Deptt. and confronted to the Assessee, what could be shorter route to annul the Adjudication Order, being repetition of SCN without even considering preliminary objections about the validity of SCN / proceedings or even on merits ? First Appeal is usual that is being filed - any help / guidance would be welcome !

U S Sharma

U S Sharma (Expert)
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10 September 2011 upto the addl commissioner level the department will not review the case, but at every stage they will confirm the proceedings of the department taken.

at CEGAT bench your representation will get heard in your favor, provided your consul is in control of the case and is capable to put strong objection against department.

from 05/03/09 ( audit demand) to 21-10-2010 ( audit demand payment under protest), there must be lots of sequences between assesee and department, after which the payment has been made.

so the department would insist the date of payment under protest to confirm the evasion i.e.21-10-2010 (or between the communication dates which is not known to us)

Get a high end councel to represent your case before the department and CEGAT, as any minor error may generate a nightmare for the assesee.

if represented properly the SCN would get quashed by CEGAT and the assessee would get relief at ultimate stage.

Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2011 The Deptt. has not taken plea of relevant date, but insist on 'suppression' of documents that were before the Audit team and basis for the Audit demand and still Division / Range continue to harp on Assessee not providing complete copies of contracts / Invoices, which have since been made the basis for SCN, since converted into Adjudication Order verbitum;
Can the two wings of Deptt. act exclusive of each other expecting copliance of similar command, separately to each; Any recommendation of a suitable / reasonable counsel for such matter at Delhi / Gurgaon / NCR

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U S Sharma

U S Sharma (Expert)
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13 September 2011 once any case is adjudicated, other wings of department don't enter the case, unelss the same is discharged by the same wing,

other wings of department enter only after (non)compliance report by said wing ( in your case its audit wing) and the R/O taken initiative only after audit findings submitted.

you can claim the copies and basics of charge from audit team, as well as from R/O where u feel, they are bound to provide the copies,

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2011 Upon adjudication, it is now for the first Appellate CCE to see reason for quashing such Adjudication more so as the Audit demand has already been deposited though under protest !
Thanks, all the same !
Circular 312/28/97-CX dated 22.04.1997 by the then Chairman CBEC was guided by the SC judgements in the cases of Padmini Products and Chemphar Drugs being against SCN invoking extended time period but still the AC/CE proceeded to adjudicate ?