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2023 (11) TMI 100 - AT - Service TaxBest judgment assessment invoked in the SCN - relevant date for reckoning the limitation under section 73 of FA - normal period of limitation - Invocation of extended period of limitation - Imposition of penalties under sections 77 and 78. Best judgment assessment - HELD THAT - Nothing in the section 72 suggests that best judgment assessment has to be done at the request of the assessee or at the behest of anyone. The Central Excise officer, evidently, can do this on his own, in other words, suo moto. Therefore, the submission of the learned counsel for the assessee that this cannot be done suo moto holds no water. Nothing in the section says that best judgment can be resorted to only if the assessee requests for it. The assertion of the learned counsel that Form 26AS can be provided only by the Income Tax department to the Central Excise officers is not correct. The assessee himself could have provided this form to the central excise department as well - the demand for the normal period of limitation which the assessee has admitted and is not contesting is also as per the best judgment assessment, inter alia, based on the Form 26AS and other records - the assessee s objections to best judgment assessment in the impugned order has no legs to stand on and deserves to be dismissed. What is the relevant date for reckoning the limitation under section 73 and what was the normal period of limitation? - HELD THAT - The proposition of the department that the date on which the return is filed after the due date should be reckoned as the relevant date cannot be accepted because (a) once the assessee does not file the return by the due date, the relevant date sets in and there is no provision in the law to modify this relevant date by any subsequent events including filing of the returns; and (b) because it results in absurdity because the assessee will be worse off by filing the return late than by not filing it at all. Hence it needs to be rejected. As far as the normal period of limitation is concerned, it was 18 months from the relevant date up to 13 May 2016, after which it was increased to 30 months. The question as to what would happen to the past cases when the period of limitation is increased was answered by the Supreme Court in Uttam Steel. It was held that limitation being a procedural law will have retrospective effect but any case which has already lapsed on the date the amendment came into force will not revive. The amendment will not put life into dead cases but those which are still live on the date of amendment will be governed by the new limitation - Therefore, for the half year ending September 2014 in the present case, the last date for filing returns was 25 October 2014 and the normal period of limitation ended on 24 April 2014. The new limit of 30 months came into force only on 13 May 2016. The normal period of limitation ended for the period upto September 2014 and for the period from October 2014, the new limit of 30 months applies. Invocation of extended period of limitation - HELD THAT - The department has not made out a case to invoke extended period of limitation in the matter. While it is true that the DGCEI discovered that some tax had escaped assessment and that the assessee does not dispute it on merits, it is equally true that the entire demand is based on the records of the assessee, some of which it produced and the other records which the DGCEI could obtain through the Income Tax department. Such a scrutiny could have been and should have been done by the Range officer with whom the Returns were filed and he was fully competent to call for any records from the assessee. Such scrutiny could also have been done by the audit team which audited its records. What is evident is that if some tax escaped assessment even after the Returns being filed with the Range Superintendent and despite the assessee was audited is that neither had done their job properly - in this case, the demand only in respect of the normal period of limitation can be sustained. Imposition of penalties under sections 77 and 78 - HELD THAT - Since it is held in favour of the assessee with respect to extended period of limitation, the penalty under section 78 needs to be set aside - The assertion of the learned counsel that the penalty under Section 77(1) (c) cannot exceed Rs. 10,000/- is also not correct. He has completely mis-read the section which provides for penalty of Rs. 10,000/- or Rs.200/- per day whichever is higher. Thus, the penalty cannot be less than Rs. 10,000/- but there is no upper limit. For all these reasons, the penalty imposed under section 77(1) (c) calls for no interference - Late fee was imposed under section 70 on the assessee for late filing of returns. This is a statutory fee and no specific averments have been made regarding this late fee - The penalty under sections 77(2) and 78 need to be set aside and the penalty under section 77(1)(c) needs to be upheld. Appeal allowed in part.
Issues Involved:
1. Best judgment assessment invoked in the SCN and the impugned order. 2. Relevant date for reckoning the limitation under section 73 and the normal period of limitation. 3. Invocation of extended period of limitation. 4. Imposition of penalties under sections 77 and 78. Best Judgment Assessment: The assessee argued that best judgment assessment was wrongly invoked, while the Revenue justified its use due to the assessee's failure to provide required documents. The tribunal found that best judgment assessment can be resorted to suo moto by the Central Excise Officer if the assessee fails to file the return or assess tax correctly. The tribunal dismissed the assessee's objections, noting that the SCN provided reasons for invoking best judgment assessment and that Form 26AS, used for assessment, could have been provided by the assessee. Relevant Date for Reckoning Limitation: The tribunal examined section 73(6) and concluded that the relevant date for reckoning limitation is the due date for filing the return if no return is filed by then. The tribunal rejected the Revenue's argument that the date of actual filing should be considered, stating that once the due date passes without filing, the relevant date is set, and subsequent filing does not alter it. The tribunal upheld the Commissioner's decision on the relevant date and limitation periods. Invocation of Extended Period of Limitation: The tribunal found that the reasons for invoking the extended period of limitation given in the SCN and impugned order were not sufficient to establish intent to evade tax. The tribunal noted that the demand was based on the assessee's records, which could have been scrutinized by the Range officer or audit team. The tribunal held that the extended period of limitation could not be invoked and sustained the demand only for the normal period of limitation. Imposition of Penalties: The tribunal set aside the penalty under section 78, as the elements required for its imposition were not present. The penalty under section 77(1)(c) was upheld, as the assessee failed to appear in response to summons and produce documents. The penalty under section 77(2) was set aside due to lack of specific violations mentioned. The late fee under section 70 was upheld as it is a statutory fee. Conclusion: Service Tax Appeal no. 51364 of 2018 filed by the Revenue was dismissed. Service Tax Appeal no. 50384 of 2018 filed by the assessee was partly allowed, upholding the demand of service tax with interest for the normal period of limitation, late fee under section 70, and penalty under section 77(1)(c). The demand for the extended period of limitation and penalties under sections 77(2) and 78 were set aside. The assessee is entitled to consequential relief, if any.
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