NON CO-OPERATION WITH AUTHORITIES FOR THE PURPOSE OF AUDIT

[Mr. M. GOVINDARAJAN]

In ‘H.B. Dave V. Commissioner of Central Excise & Service Tax, Vadodara - I’ - 2015 (3) TMI 581 - CESTAT AHMEDABAD the audit team of the Central Excise Department addressed a letter to the appellant on 23.07.2009 for producing and submitting the appellant’s profile.  The said letter was received but no information/documents has been furnished by the appellant. Therefore the Audit team made a reminder on 07.09.2009 to the appellant.  The appellant gave reply to the said letter by submitting the profile of the appellant vide his letter dated 20.09.2009.  The department issued an acknowledgement for the same on 22.09.2009.  On submission of the same the audit was conducted and the audit report has also been given to the appellant.

Thereafter the department initiated action against the appellant for non submission of the profile.  The allegation is that the appellant willfully did not submit the documents.  Penalty was imposed under Section 77(1) (c) of the Finance Act, 1994 read with Rule 5A(2) of the Service Tax Rules, 1994.   The appellant filed appeal before the Commissioner (Appeals) who is the first appellate authority against the order of the Adjudicating Authority. The appellate authority upheld the order of the lower authority.

Against this order the appellant filed appeal before the Tribunal.  Section 77 of the Finance Act, 1994 provides for penalty for contravention of rules and provisions of the Act for which no penalty is specified elsewhere.  Section 77(1) (c) provides  that who fails to-

• furnish information called by an officer in accordance with the provisions of this Chapter or rules made there under; or
• produce documents called for by a Central Excise Officer in accordance with the provisions of this Chapter or rules made there under; or
• appear before the Central Excise Officer, when issued with a summon for appearance to give evidence or to produce a document in an inquiry,

 shall be liable to a penalty which may extend to ten thousand rupees or two hundred rupees for every day during which such failure continues, whichever is higher, starting with the first day after the due date, till the date of actual compliance.

Rule 5A(2) of Service Tax Rules, 1994 (before amendment vide Notification No. 23/2014-Service Tax, dated 05.12.2014) provides that every assessee shall, on demand, make available to the officer authorized under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party, as the case may be,-

•  the records as mentioned in sub-rule (2) of rule 5;
• trial balance or its equivalent;  and
• the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 ( 43 of 1961), for the scrutiny of the officer or audit party, as the case may be.

The issue which falls for the consideration of the Tribunal is whether the appellant had co-operated with the authorities for the purposes of audit by submitting documents or not.  The Revenue alleged that the appellant willfully did not submit the documents while the appellant produces before the Tribunal an acknowledged reply of the letter of the appellant by the Department for the receipt of the requirement documents.  The Tribunal noted that subsequent to such letter having been given to the department audit has been taken place and final audit report has also been given to the appellant.   The Tribunal was of the view that there is no reason to sustain penalty imposed by the adjudicating authority and upheld up by the first appellate authority on the appellant for non co-operation.  The Tribunal set aside the order by allowing the appeal filed by the appellant.