MONETARY LIMIT FOR ISSUING SHOW CAUSE NOTICE, Service Tax

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

What is the Monetary limit for issuing a show cause notice & impugned order by the service tax authority for the period prior to GST? Please let me know with a notification since it's very urgently required to be filed in court.

Thanks in Advance.

Posts / Replies

[Amit Agrawal]

To the extent I remember, there was no lower monetary limit to issue SCN under service tax regime. In other words, Tax dept. could issue SCN demanding small service tax amount say even Rs. 10,000/-.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[THYAGARAJAN KALYANASUNDARAM]

Dear Sir,

In my client's cases, recently there are SCN issued by demanding more than Rs.10 Lakhs by the AC and Rs.31 Lakhs issued by the DC, and Rs.79 Lakhs issued by the JC. As per Notification No. 48/2010 - Dated: 8-9-2010 - ST says the limit for issuing the SCN according to that, the above authority issued SCN was without jurisdiction and authority of law.

Please advise me on this. It very urgently needs to be submitted in court by tomorrow.

Thanks in Advance.

[Amit Agrawal]

Kindly note:

2005 (4) TMI 68 - SUPREME COURT - AEON´S CONSTRUCTION PRODUCTS LTD. VERSUS COMMR. OF C. EX., CHENNAI

[Amit Agrawal]

Above quoted Notification No. 48/2010 - Dated: 8-9-2010 - ST by you is reference to 'Section 83A - Power of Adjudication of Penalty'.

Same does not deal with 'power to issue SCN' at all.

And, Section 73 (of Finance Act, 1994 (32 of 1994) gives power to issue SCN (& to adjudicate thereon) to 'Central Excise Officer' (where no monetary limits are prescribed).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Who has adjudicated those SCNs?

Even if you manage to differentiate above quoted Apex Court ruling and even if adjudicating authority has exceeded his power to levy penalty u/s 78 (in view of said notification read with Section 83A), I do NOT see any possibility of SCN getting squashed.

At the best, you can get matter remanded back for fresh adjudication by superior authority having power u/s 83A (even this seems difficult, to my mind, as original officer has powers to adjudicate u/s 73 and penalty u/s 78 is consequential to determination of such liability u/s 73).

In summary & with total respect, I am not sure if one can achieve anything meaningful for client/s by taking such grounds.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

DEAR SH.THYAGARAJAN KALYANASUNDARAM,

Pl. go through the following :-

Relevant extract of Circular No. 1053/2/2017-CX., dated 10-3-2017 (Meant for Service Tax also)

6.0 Authority to issue SCN : A SCN should ideally be issued by the authority empowered to adjudicate the case as this ensures accountability as well as rigour of examination as demands of higher amounts are adjudicated by the officers of higher rank. Details of authority empowered to adjudicate the cases as per demand of duty are discussed in paragraph no. 11. Though, issue of SCN by an officer of the rank empowered to adjudicate the case is the accepted norm, a SCN issued by a Central Excise officer of rank other than the one prescribed in the circular would not ipso facto be an invalid SCN.

11.1 Monetary limits : Board has revised monetary limits for adjudication on 29-9-2016. The revised monetary limits and other instructions in relation to adjudication are as follows :

Sl. No.	Central Excise Officer	Monetary Limits of duty/tax/credit demand for Central Excise and Service Tax
1.	Superintendent	Not exceeding Rupees Ten lakhs
2.	Deputy/Assistant Commissioner	Above Ten Lakhs but not exceeding Rupees Fifty Lakhs
3.	Additional/Joint Commissioner	Above Fifty Lakhs but not exceeding Rupees Two Crore
4.	Commissioner	Without limit i.e. cases exceeding rupees two crores

The above monetary limits are hereby prescribed for all categories of cases, except the following :

(a) cases of refund (including rebate) under Section 11B of the Central Excise Act, 1944, as made applicable to Service Tax cases also under Section 83 of the Finance Act, 1994, shall be adjudicated by the Deputy Commissioner/Assistant Commissioner without any monetary limit.

(b) cases related to issues mentioned at Sl. No. (a) and (d) under the first proviso to Section 35B(1) of the Central Excise Act, 1944 shall be adjudicated in the following manner :

S. No.	Central Excise Officer	Monetary Limits for Central Excise
1	Additional/Joint Commissioner	Exceeding Rs. 50 lakh
2	Deputy/Assistant Commissioner	Above Rs. 10 lakh but not exceeding Rs. 50 lakh
3	Superintendent	Not exceeding Rs. 10 lakh

[Amit Agrawal]

Perfect closure, by Shri Kasturi Sethi Ji, to the entire discussion .

In view of board circular sited by him, SCNs - as listed by the querist in post at serial number 2 above - are issued by "proper authorities" as authorised by Board.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Sh.Amit Agrawal Ji,

Thanks a lot, Sir.

[THYAGARAJAN KALYANASUNDARAM]

Dear Sir,

Thanks for your valuable response.

Is the Circular issued by the department binding on us?

Is no notification for adjudication for issuing SCN?

[Amit Agrawal]

Kindly refer to the Notification No. 44 /2016- Service Tax dated 28^th September 2016.

I hope, this makes it very clear to you that arguments - as put by you - has got no legal backing - both on your facts, applicable law & Supreme Court ruling.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Circular is binding on the department as per the judgement of Supreme Court. It is the jurisdiction of the department and NOT yours/Noticee/Assessee. Circular has been issued as per the Central Excise Act as made applicable to Service Tax law. Monetary limits are always fixed for adjudication. Hence no notification.

[Amit Agrawal]

Dear Querist,

I have noted that you wanted to put subject arguments urgently for filing in the court.

I would strongly suggest you not to do so, considering that facts of your client's case, applicable notification, circular as well as Apex Court ruling - EVERYTHING - are directly against your grounds.

Taking such arguments can be very detrimental for client's case and High Court (assuming that you are talking about writ petition challenging jurisdiction) can even impose cost for raising such frivolous grounds.

Hence, it would be better to defend your client's case both on its merits & time-limitation, instead of challenging jurisdiction of SCN issuing authorities and their adjudication.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Right and sincere advice by Sh.Amit Agrawal Sir.