2018 (12) TMI 1533 - HC - Central Excise

Jurisdiction - power of Joint Commissioner to issue SCN under the provisions of the Central Excise Act, 1944 - Preparation of Draft Audit Report - Held that - Issue Notice, returnable on 26th December 2018.

Summary

Issues involved:
1. Compliance with Central Excise and Service Tax Audit Manual, 2015 regarding preparation and issuance of audit reports.
2. Timeliness of serving Final Audit Report before issuing show-cause notice.
3. Authority of Joint Commissioner to issue show-cause notice under Central Excise Act, 1944.

Comprehensive Analysis:

Issue 1: Compliance with Audit Manual
The petitioner's counsel highlighted the provisions of the Central Excise and Service Tax Audit Manual, 2015, emphasizing the steps for preparing and finalizing audit reports. Reference was made to clauses detailing the consultation process with audit authorities, submission of draft reports, and finalization within a specified timeframe. The importance of following these procedures was stressed to ensure transparency and adherence to established guidelines.

Issue 2: Timeliness of Final Audit Report
A crucial point raised was the sequence of events leading to the issuance of the show-cause notice. The petitioner argued that the Final Audit Report, a prerequisite before issuing such a notice, was served after the notice had already been sent. This discrepancy was highlighted as a violation of the prescribed timeline set forth in the Audit Manual, raising concerns about procedural irregularities and potential implications on the legality of subsequent actions.

Issue 3: Authority to Issue Show-Cause Notice
Another significant contention was regarding the authority of the Joint Commissioner under the Central Excise Act, 1944, to issue the impugned show-cause notice. The petitioner's counsel argued that as per the provisions of the Central Goods and Services Tax Act, 2017, the Joint Commissioner lacked the power to issue a show-cause notice under the Central Excise Act, 1944. This discrepancy was pointed out as a legal flaw affecting the validity of the notice issued.

In response to the arguments presented, the court took cognizance of the submissions made by the petitioner's counsel and issued a notice returnable on a specified date. Additionally, as an interim measure, the respondents were restrained from further proceedings based on the challenged show-cause notice. The detailed analysis of the issues raised in the judgment reflects a meticulous examination of procedural compliance, timeliness, and legal authority, underscoring the importance of adherence to statutory provisions in administrative actions within the realm of taxation laws.