Extended period of Limitation cannot be invoked universally, depends on peculiar facts

The Hon’ble Supreme Court in the case of Commissioner of CGST and Central Excise, Jabalpur v. M/s. Birla Corporation Limited [Civil Appeal No. 6410 of 2023 dated October 03, 2023], dismissed the appeal filed by the Revenue Department, holding that the extended period of limitation for issuing Show Cause Notice ("the SCN") has to be invoked as per facts of the case, thereby denying the benefit of the extended period of limitation to the Revenue Department. 

Facts

The Revenue Department ("the Appellant") issued the SCNto M/s. Birla Corporation Limited ("the Respondent") demanding Rs. 3,41,13,776/-.

The Appellant vide Order-in-Original No. 25/COMMR/CEX/JBP/2020 dated March 30, 2021 ("the OIO"), dropped the demand amounting to Rs. 3,41,13,776/- and conforminglyraised the demand for payment of Excise Duty of Rs. 49,27,427/- along with an equivalent penalty of Rs. 49,27,427/- under Section 11AC of the Central Excise Act, 1944. 

Aggrieved by the OIO, the Respondent filed an Appeal before the CESTAT, Delhi ("the Tribunal") on the ground that the SCN was issued beyond the period of limitation and there was no intention to evade payment of tax, therefore, an extended period of limitation cannot be invoked, wherein the matter was remanded back to the Appellant for adjudication.

However, as per Final Order No. 50384/2023 dated March 23, 2023("the Impugned Order"), the Tribunal allowed the appeal and set aside the OIO, holding that the entire demand raised was time-barred. The Tribunal opined that it is the Respondent’s responsibility to self-assess and file the required returns. However, the Appellant must scrutinise the returns and call for any information required. 

Respondent contended that several rounds of the audit were conducted by the Appellant and a similar type of SCN was issued during the previous period on the same issue. Thus, the Appellantwas fully aware of the issue and it was the duty of the Appellantto scrutinize the returns and issue SCN within time. 

Aggrieved by the Impugned Order, the Appellant filed an Appeal before this Hon’ble Supreme Court for setting aside the Impugned Order, on the ground that it is the responsibility of the Appellant to scrutinise the return and issue SCN within the normal period of limitation. 

Issue

Whether the extended period of limitation can be invoked only on the ground that the returns are not scrutinised on time and records are not called by issuing of SCN?

Held

The Hon’ble Supreme Court in Civil Appeal No. 6410 of 2023 held as under:

• Observed that, five audits for the relevant period have been conducted by the Appellant and similar SCN has been issued by the Appellant for the same issue. 
• Held that, the observations made in the Impugned Order, enumerating upon the duty of the Officer to scrutinise the returns and issue SCN within time, have been made in reference to facts and circumstances of the case, and do not have any general application, thereby holding that extended period of limitation cannot be invoked.