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TMI Blog2018 (12) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of service provider, appellant is to be tested for suppression etc. Time Limitation - Held that:- The audit is a process which is carried on upwards from the last financial year audited till the last completed financial year preceding the date of audit which is contrary to the provision of Section 73(1) whereby if any fraud collusion, misstatement or suppression is noticed by the department, while processing a return or investigating a firm, the respondent department can go up to five years and serve show-cause to justify tax liability - In the instant case, show-cause was issued on 03.02.2017 calling for imposition of penalty under Section 78 for irregularity found in the financial year 2012-15. It is not understood as to what irreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount on services provided by various contractors but had retained an amount of ₹ 46,45,585/- from them against which it had availed cenvat credit of ₹ 5,74,194/- in respect of it tax component. Reverse charge service tax liability on security services was also not discharged by the appellant as the service recipient was another discrepancy found during audit. Appellant proactively reversed the entire cenvat credit and also discharged the service tax liability under reverse charge in cash along with payment of appropriate interest and informed the departmental authorities the detail of such reversal and payment. But vide show-cause notice dated 03.02.2017 appellant was called for show-cause as to why those payments were not appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was given that even the full payment from the service recipient has not been received and part payment has been due, he pointed out that Rule 4(7) of Cenvat Credit Rules would not be applicable to the appellant s case. He pointed out that there was no fraud, collusion or misstatement that could speak about guilty mind or mensrea on the part of the appellant as all of its transactions are reflected in the appellant s book of accounts and they were produced before the authority on the basis of which information, the present duty demand has been raised by the respondent department. He also placed reliance in case laws reported in UOI vs. Rajasthan Spinning Weaving Mills 2009 (238) ELT 3 (SC), Tamil Nadu Housing Board s 1994 (74) ELT 9 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at length and perused the case records with reference to judicial decisions on which reliance has been placed. Admittedly there is no mechanism available for determination of admissibility of cenvat credit in the self assessment era for which EA audit 2000 procedure has assumed its importance. 6. Now coming to the statutory audit procedure, the purpose of audit, as available in the Manual published by the Institute of Chartered Accountants of India in respect of EA audit and CERA audit under Chapter 17 is that the idea behind such conduct of verification is to reasonably ensure that no amount, which under the central excise law is chargeable as duty, escapes taxation and the process of verification is always carried out in the presence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating a firm, the respondent department can go up to five years and serve show-cause to justify tax liability. In the instant case, show-cause was issued on 03.02.2017 calling for imposition of penalty under Section 78 for irregularity found in the financial year 2012-15. It is not understood as to what irregularity was noticed by the respondent department between 01.04.2015 to 03.02.2017, comprising of a period of 23 months to invoke extended period jurisdiction and go back to financial year starting from March 2015 to April 2012. 8. As observed above, the basic purpose of audit is to find out irregularity which might not have gone to the notice of the assessee and advice them for prompt discharge of tax liability and the same is a part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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