Minimal Litigation

Looking at the rising litigation work arising in the taxation department Board has come up with some clarification to amendments made to Section 73, 76 and 78 vide Finance Act, 2015.

Show Cause Notice in a case involving the extended period of limitation, where the assessee pays the tax, interest and 15% penalty as prescribed, can be waived if requested in writing by the assessee, then in such cases the SCN and the representation (if he desires) can be oral. The Hon’ble Supreme Court in the case of Commissioner of Customs, Mumbai vs. Virgo Steels reported in CIO 2002 SC 8 held that: “If we consider the mandatory requirement of issuance of notice under Section 28 of the Act, it will be seen that that requirement is provided by the Statute solely for the benefit of the individual concerned, therefore, he can waive that right. In other words, this Section casts a duty on the Officer to issue notice to the person concerned of the proposed action to be taken. This is not in the nature of a public notice nor any person other than the person against whom the proceedings are initiated has any right for such a notice. Thus, the right of notice being personal to the person concerned the same can be waived by that person.”

If the grounds on which the department feels that there has been short/non-payment of tax/duty are intimated to the assessee orally with its quantification and the assessee indicates in writing that he has been informed about such grounds and he accepts the grounds and the quantification and is waiving the requirement of a written SCN, then a written SCN need not be issued.

Further, clause (i) of the second proviso to section 78 of the Finance Act, 1994 and clause (d) of sub-section (1) of section 11AC of the Central Excise Act. 1944 refer to a thirty day period, from the date of service of the notice, within which the assessee may make the payment of tax/duty, interest and reduced penalty of 15%. In case the assessee makes a written request for waiver of a written SCN, the thirty day period can be computed from the date of receipt of such a letter by the department.

There is no bar on an assessee making the payment of tax/duty, interest and reduced penalty of 15% even before the date of receipt of such a letter by the department. Such an assessee cannot be placed on a worse footing than one who pays tax/duty, interest and reduced penalty of 15% within 30 days of the receipt of the SCN/receipt of letter by the department.

With these efforts Board will be able to cut short the need of unnecessary paperwork and compliance formalities as well as reduced litigation to a reasonable extent.

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