Time Limit for Initiation of Penalty Proceedings

Amir (Learner) (4016 Points)
Replied 07 January 2010

Dear Sanjeev,

Your case is bit technical, rite now i don't have access to text books..tomorrrow I wil surely try to give reply..

CA Jimmit D Mehta (Employed) (494 Points)
Replied 08 January 2010

ALSO REPLY THE SAME TO ME....

THANKS...

Amir (Learner) (4016 Points)
Replied 08 January 2010

Sir,

1) Time limit for issuing SCN in cases other than evasion,etc is 1 Year from the date of filing return..This means that SCN issued on 05.09.2007 was valid (since SCN could have issued till 22.11.2007)

2) Now, Penalty cannot be imposed merely by a SCN there has to be an ORDER IMPOSING PENALTY, SCN aims at giving oppurtunity to assessee for explaining his reasons/grounds.

3) Nature of Order u/s 72 is like a BEST JUDGEMENT ASSESSMENT.

4) As I stated earlier where assessee has deposited tax along with interest before the issue of SCN then Assessment Proceeding should be dropped..

I don't find any reason for another SCN for the same period UNLESS IT IS A CASE OF REVISION OF ORDER..

There can be many different possibilities for this SCN.

My Advice would be-

1) Go & meet that Officer, try to explain ur grounds/reasons..

2) If he don''t find ur reasons as reasonable and if amount of penalty is not much then DEPOSIT IT, there is no point in litigation..

3) If the amount of penalty is huge then better go for legal advice from a Consultant..

1 Like

SANJEEV KUMAR (PROPRIETOR) (52 Points)
Replied 08 January 2010

Dear Amir

1. under which provision the Time Limit for issue of SCN for penalty has been mentioned.

2. u/s 72 Best Judgement Assessment can not be made for penalty.

3. under which notification/provision this is mentioned that where assessee has deposited tax along with interest before the issue of SCN then Assessment Proceeding should be dropped..

sanjeev

Amir (Learner) (4016 Points)
Replied 08 January 2010

Dear Sir,

1) Time Limit for issuanxce of SCN is mentioned in Sec 73

2) U r rite, Penalty cannot be imposed u/s 72. Penalty is prescribed u/s 76, 77 & 78

3) Under Sec 73(3) it is mentioned that assessment porceedings will be dropped in cases where assessee has deposited entire amount before issuance of SCN..But again it is not written that Penalty proceedings will also be dropped..

SANJEEV KUMAR (PROPRIETOR) (52 Points)
Replied 08 January 2010

Dear Amir

Sec.73 deals with cases where evasion of service tax is there but does not deal with cases where there is no evasion.

My question was whether best judgement assessment can be made u/s Sec.72 for imposing penalty

For issuance of SCN for short payment of service tax the time limit is 1 year but what is the time limit for imposing penalty when there is no evasion/ short payment of service tax

sanjeev

Amir (Learner) (4016 Points)
Replied 09 January 2010

Dear Sanjeev Sir,

1) Its not that Sec 73 deals only with the cases of evasion, IT deals with the Issuance of SCN and As per Sec 73 SCN in cases other than Evasion can be issued upyo 1 year..

2) Best Judjement assessment is a Assessment Proceeding whereas Penalty is imposed by Penalty Proceedings..

3) Time limit is 1 year as I mentioned earlier that it may be a case of revision of orders by the Department..(There is provision in Law where Officer can revise the earlier order passed by his juniors)

SANJEEV KUMAR (PROPRIETOR) (52 Points)
Replied 09 January 2010

Dear Amir

Pls read the Sec.72 :72. BEST JUDGMENT ASSESSMENT.

If -

(a) any person fails to make the return under section 70, or";

(b) any person having made a return fails to comply with all the terms of a notice issued under sub-section (1) of section 71, or

(c) the Central Excise Officer is not satisfied with the correctness or the completeness of the accounts of the assessee, the Central Excise Officer, after taking into account all the relevant material which he has gathered, shall, by an order in writing, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment.73. VALUE OF TAXABLE SERVICES ESCAPING ASSESSMENT.

If -

(a) the Central Excise Officer has reason to believe that by reason of omission or failure on the part of the assessee to make a return under section 70 for any quarter or to disclose wholly and truly all material facts necessary for his assessment for any quarter, the value of taxable service for that quarter has escaped assessment or has been under assessed, or

(b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the
assessee, the Central Excise Officer has, in consequence of information in his possession, reason to believe that the value of any taxable service assessable in any prescribed period has escaped assessment or has been under assessed, or

he may, in cases falling under clause (a), at any time within five years, and in cases falling under clause (b), at any time within six months from the date for filing the return, serve on the assessee a notice and proceed to assess or reassess the value of taxable service.

Explanation : Where the services for the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing aforesaid period of five years or six months.