Churning out Periodical Show-cause notices in Service Tax is passé - Budget 2012 now allows Excise Authorities to waive statement of demand - go green!

By TIOL News Service

NEW DELHI, MAR 19, 2012: ONE of the best things that emanates from the Finance Bill, 2012, speaking from the department point of view, is that apart from increasing the normal period of limitation in Service Tax matters to “eighteen months” it has also “done away with periodical demand notices”.

And, mind you, this is no fiction.

The Finance Bill, 2012, vide clause 143 (K) apart from substituting the words “one year” to “eighteen months” has also proposed insertion of the following sub-section (1A) in section 73 of the Finance Act, 1994 concerning “Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded”.

The sub-section (1A) will read thus –

“(1A) Notwithstanding anything contained in sub-section (1), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent period, on the person chargeable to service tax, then, service of such statement shall be deemed to be service of notice on such person, subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices,”

The J.S (TRU-II) letter dated 16 th March, 2012 mentions this legislative change as being an attempt to “save paper” and in paragraph C.1 (4)(ii) mentions –

“ii. A new sub-section (1A) is being inserted to save the botheration of re-typing the same charges (and save paper) when a follow-up demand is given for a period subsequent to the previous notice(s) on same grounds;”

Noble and well-intentioned idea, but will the departmental officers pay heed to the idea of “going green” is the moot question.

Be that as it may, a few doubts though –

+ Will the time-limit for issuing the “statement” continue by default inspite of the sub-section (1A) opening with the words “Notwithstanding anything contained in sub-section (1)”;

+ In other words, should the assessee be “served” the ‘demand statement' within the normal period of limitation?

+ Who is to decide whether the grounds relied upon are same as that mentioned in the earlier notice – can this be subject to legal scrutiny?

+ can new section, rules be incorporated while serving the statement containing the details of service tax not levied or paid etc.?

+ cannot the assessee also ask the department to treat his earlier reply as being reply to the next and subsequent demands raised through “statement”?

+ Will the monetary limits laid down by the Central Board of Excise & Customs apply while issuing of “such demand statements” by the Central Excise officer?

+ Can such “demand statements” be also transferred to the Call Book register?

+ If “demand statements” are only to be issued, can adjudication of the same be done away with (to save paper) once the parent demand stands adjudicated?

+ Can it be presumed that the subsequent “demand statement(s)” will also meet the same treatment at the hands of the adjudicating authority?

Looking at the barrage of questions that can be posed in the eventuality of this section (1A) becoming a reality, one may as well have a re-think and iron out the creases before the attempt to save a few reams of paper leads to a glut of litigation.

All said and done, there is one more way of going green – plant more trees!