The Central Board of Indirect Taxes and Customs (CBIC) has issued the instructions dated 18th November 2021 on the issuance of Show Cause Notices (SCNs) and adjudication process in the pre-GST regime. i.e. legacy issues.
The Audit has pointed out that Draft SCNs have been found pending for issuance. There is an inordinate delay in adjudication. Adjudication orders have not been issued within the stipulated period after completion of personal hearings.
Periodical review of call bookcases has not been done. In certain cases, the records/files pertaining to adjudication have not been produced before the Audit Party. With the introduction of GST law, Board has consistently expressed its desire and resolve that it is of utmost importance to dispose of the legacy matters related to Central Excise and Service Tax regime as expeditiously as possible.
In this regard, Board has issued instructions from time to time regarding disposal of legacy issues such as issuance of Show cause notice, adjudication of SCNs, review of call bookcases, etc. However, in view of the observations of the Audit, Board desires that the directions must be strictly adhered to.
Once the investigation is over/analysis is done and draft show cause notice is prepared, SCN should be issued without any delay, without waiting for the last date of issuance of SCN.
Attention is invited to sub-section (11) of section 11A of Central Excise Act, 1944 read with sub-section (4B) of section 73 of the Finance Act, 1994 which stipulates that SCNs issued in normal cases should be adjudicated within six months in respect of Central Excise (CE) & Service Tax (ST), and SCNs issued involving extended period should be adjudicated within two years relating to CE and one year relating to ST where it is possible to do so. Board desires that the time limits mentioned in relevant Acts must be adhered to.
CBIC has notified in the latest instructions that it has been pointed out that in contravention to the Board’s D.O letter dated March 04, 1992, there are instances where prior approval is not taken from the Commissioner before transferring the case to Callbook. In this regard, the instructions issued by Board vide above mentioned D.O letter dated March 04, 1992, are reiterated. The cases must be transferred to the call book only with the approval of the Commissioner as stipulated earlier. A comprehensive one-time review of all cases may also be carried out in this regard and necessary action taken.
Further CBIC has added that in regard to above reference is invited to Circular dated April 29, 1988, issued from F.No. 240/15/88-CX.7 wherein it has been communicated that the files leading to the passing of adjudication/appellate orders need not be made available to the audit parties of the Accountant General. It may be seen that the above-mentioned Circular was issued keeping in view the basic premise that audit parties cannot question the decision taken by the judicial or quasi-judicial authority. The said circular thus needs to be read in a proper context that sharing of records with audit parties does not interfere with the judicial/quasi-judicial proceedings. The audit parties may require the production of the records for ensuring that due procedure is followed or otherwise. Therefore, the request of the Audit for production of records must be acceded to.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
