CA Pradeep Jain, CA Preeti Parihar, CA Anish Kumbhat
Section 11A of the Central Excise Act, 1944 prescribes the issuance of show cause notice and other related provisions. In this section, sub-section 7A is inserted by Budget, 2013 to cover the cases of recurring nature where the show cause notices are issued on the exactly same grounds and allegations from time to time to the same assessees. This piece of article is about if and buts involved in this new section.
If proceedings are invoked against the assessees on a particular issue, these are being invoked for the subsequent periods also on recurring basis. This is very particular on the cases related to the interpretation of legal provisions. For eg.: about a year back, there was dispute regarding payment of service tax under reverse charge from Cenvat. The assessees were paying from Cenvat while the department was issuing the show cause notices requiring them to pay the same in cash. This was a recurring natured issue and the show cause notices were being issued for each year on the exactly same grounds and allegations. This is only an example and there are a no. of other issues too where the show cause notices are being issued on recurring basis.
Sub-section 7A inserted in section 11A:-
In order to save the time, money and energy of the departmental officers to prepare and issue the show cause notice on the even matter again and again, sub-section 7A has been inserted in section 11A. This provision says that where a show cause notice has already been issued on a subject to an assessee, there is no need to issue a show cause notice again, only a statement showing duty calculation will suffice. The section contains the following language:-
“Notwithstanding anything contained in sub-section (1) or sub-section (3) or sub-section (4) or sub-section (5), the Central Excise Officer may, serve, subsequent to any notice or notices served under any of those sub-sections, as the case may be, a statement, containing the details of duty of central excise not levied or paid or short-levied or short-paid or erroneously refunded for the subsequent period, on the person chargeable to duty of central excise, then, service of such statement shall be deemed to be service of notice on such person under the aforesaid sub-section (1) or sub-section (3) or sub-section (4) or sub-section (5), subject to the condition that the grounds relied upon for the subsequent period are the same as are mentioned in the earlier notice or notices.”
Thus, this section applies if the following conditions are satisfied:-
If both the above conditions are satisfied, then the statement containing the details of excise duty will be deemed as the serving of show cause notice.
These are only a few loopholes that question the validity of this section.
The loopholes apparent from the language of the sub-section 7A are indicators of the fact that this is going to be a big issue in coming time. A timely amendment in the section by incorporating the answers to these questions is required, else the department, as always, is ready with its new weapon to harass the poor assessees…