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TMI Blog2023 (10) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... the CGST Act, 2017 shows that the various powers of the authorities were saved including the power to scrutiny and audit. However, the procedure in which the power of audit is to be exercised which is Section 72(A) of the Act of 1994 is not saved - Reference in this regard is made to the observation of the Supreme Court in the case of Vivek Narayan Sharma and Others vs. Union of India and Others, [ 2023 (1) TMI 337 - SUPREME COURT] wherein at paragraph No.148, the Supreme Court observed that an interpretation which advances the purpose of the Act and which ensures the smooth and harmonious working should be chosen. Now coming into the facts involved in the instant case, it would be seen that for the period from April, 2012 to March, 2015, audit was duly completed. Subsequent thereto, on 17.08.2017, there was initiation of audit for the period from April, 2015 to 30.06.2017 - the provision of Section 73 of the Act of 1994 empowers the Central Excise Officer to issue demand-cum-show cause notice within a period of 30 months from the relevant date and if it falls within the proviso to Sub-Section (1) of Section 73 of the Act of 1994 within 5 years. This power to do so has been saved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted the various documents on various dates which would be apparent from a perusal of the documents annexed as Annexure-P-4. It reveals from the said documents that the same related to the period from April, 2012 to March, 2015. It is further seen from the documents enclosed as Annexure-P-4 that the respondent No.4 had made an audit report on 02.02.2017 for the period from April, 2012 to March, 2015. 4. Subsequent thereto, it is also seen from the Annexure-P-1 that the respondent No.4 issued another communication dated 17.08.2017 informing the petitioner that the petitioner s unit would be audited by the Central Excise and Service Tax Audit Party and the petitioner was requested to submit the various documents for the last 5 financial years, i.e. 2012-13 to 2016-2017 or next to the period of the last audit up to 30.06.2017 on 24.08.2017. It is also seen from the records that the petitioner duly participated in the said audit being carried out by the Central Excise and Service Tax Audit Party without any objection. This aspect of the matter is apparent from a perusal of the Annexure-P-5 whereby the Petitioner submitted its reply to the on spot audit objections raised by the team o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was directed to appear before the Joint Commissioner, Central Goods and Service Tax, Dibrugarh on such dates fixed so as to avail the opportunity to be heard either in person or through its authorized representatives with due authorization/vakalatnama in original along with all documentary evidence upon which the petitioner intended to reply in support of defence. 7. The Petitioner instead of submitting his reply to the demand-cum-show cause notice dated 07.05.2019 had approached this Court challenging the demand-cum-show cause notice by filing the instant writ petition. 8. It reveals that this Court vide an order dated 04.10.2019 permitted the petitioner to submit the detailed response before the authorities within a period of four weeks and further directed that no coercive action be taken against the petitioner pursuant to the proceedings initiated as per the demand-cum-show cause notice dated 07.05.2019 till the next date. The record further reveals that the interim order had been continuing from time to time. 9. The petitioner had also filed an additional affidavit whereby the reply to the demand-cum-show cause notice submitted by the petitioner had been enclosed as Annexure-P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the petitioner that taking into account vide Section 173 of the Act of 2017, the Act of 1994 stood repealed and only certain things have been saved which have been mentioned in Section 174 of the Act of 2017 on the basis of the said, the learned counsel for the petitioner s submissions were two folds. First, the audit commenced on the basis of the communication dated 17.08.2017, i.e. after coming into effect of the Act of 2017, that too when the Act of 1994 was no longer in force and as such there was nothing which could have been saved by Section 174 of the Act of 2017 as there was nothing pending at that point of time. Secondly, it was further submitted that even assuming for argument s sake, the proceedings under the Act of 1994 was still permissible by virtue of Section 174 (2) (e) of the Act of 2017, then also such audit ought to have been done in terms with Section 72A of the Act of 1994 and for initiating proceedings under Section 72A of the Act of 1994, the Principal Commissioner of Central Excise or the Commissioner of Central Excise had to have reasons to believe about the existence of the circumstances as mentioned at Clauses (i) to (iii) of Sub-Section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the said point for determination, this Court finds it relevant to take note of some of the provisions of the Act of 1994. Section 70 of the Act of 1994 relates to Furnishing of Returns. It stipulates that every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding Rs.20,000/- for delayed furnishing of return, as may be prescribed. Therefore, from the Scheme of Section 70 of the Act of 1994, it would show that liability to pay service tax would be a self assessment of the tax due by the assessee on the service provided by the assessee himself. 15. Section 72 of the Act of 1994 relates to best judgment assessment. As per the said provisions, the Central Excise Officer is empowered to make assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. The said power can be exercised by the Central Excise Officer, if any person liable to pay service tax either fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied or short-paid or erroneously refunded by issuance of a notice within thirty months from the relevant date. The proviso to Sub-Section (1) of Section 73 of the Act of 1994 enlarges the period for issuance of notice from thirty months to 5 years where any service tax has not been levied/paid or short-levied or short-paid or erroneously refunded by reason of (a) fraud; or (b) collusion; or (c) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of Chapter V or of the Rules made thereunder with intent to evade payment of service tax. 18. In the backdrop of the above, let this Court take note of the Constitution (101st Amendment) Act, 2016 (for short, Amending Act, 2016) whereby the Constitution of India was amended and the Goods and Service Tax was introduced. By this amendment, concurrent taxing powers were conferred on the Union as well as the State including the Union Territories. Article 246A was inserted to the Constitution whereby the special provision for levy of GST by both the Union as well as the State was introduced. Article 269A of the Constitution was also inserted to provide for levy and collection of GST in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if Chapter V of the Finance Act, 1994 had not been so amended or repealed. Therefore, w.e.f. 01.07.2017, i.e. the date on which the CGST Act of 2017 came into force, all such powers which were vested upon the authorities in respect to the period prior to 01.07.2017 pertaining to inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication or other legal proceedings etc. were saved as if the Act of 1994 had not been amended or repealed. 21. Now the question arises as how the authorities would exercise their powers which were saved in respect to the period prior to 01.07.2017. A perusal of Section 174 (2) (e) of the CGST Act, 2017 shows that the various powers of the authorities were saved including the power to scrutiny and audit. However, the procedure in which the power of audit is to be exercised which is Section 72(A) of the Act of 1994 is not saved. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id audit as would be apparent from the Annexure-P-5 that too without any objection or challenge. It is only after the audit was carried out and the impugned demand-cum-show cause notice was issued on 07.05.2019 that the petitioner had assailed the Respondent Authority s power to carry out the audit. As already observed, the provision of Section 73 of the Act of 1994 empowers the Central Excise Officer to issue demand-cum-show cause notice within a period of 30 months from the relevant date and if it falls within the proviso to Sub-Section (1) of Section 73 of the Act of 1994 within 5 years. This power to do so has been saved under Section 174 (2) (e) of the Act of 2017. It is also seen from Section 174 (2) (e) of the Act of 2017 that not only the said power to make recovery is saved, but to carry out investigation, enquiry and verification (including scrutiny and audit) have also been saved. Under such circumstances, in view of coming into effect the CGST Act of 2017, if any audit is carried out for the purpose of verification or investigation, the same has to be done in terms with Chapter- XIII of the CGST Act of 2017. At the cost of repetition, Chapter-XIII of the CGST Act of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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