Best judgment assessment upheld when conducted suo moto without assessee request under section 73

CESTAT New Delhi upheld best judgment assessment conducted suo moto by Central Excise officers without assessee's request. The tribunal determined relevant date for limitation under section 73 cannot be modified by subsequent return filing after due date. Normal limitation period was 18 months until May 2016, then increased to 30 months with retrospective effect on live cases. Extended limitation period was rejected as department failed to establish grounds, relying on assessee's own records that should have been scrutinized during regular audit. Penalty under section 78 was set aside due to normal limitation period application, while penalty under section 77(1)(c) was upheld with no upper limit beyond Rs. 10,000 minimum. Appeal partially allowed.

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Issues Involved:
1. Best judgment assessment invoked in the SCN and the impugned order.
2. Relevant date for reckoning the limitation under section 73 and the normal period of limitation.
3. Invocation of extended period of limitation.
4. Imposition of penalties under sections 77 and 78.

Best Judgment Assessment:
The assessee argued that best judgment assessment was wrongly invoked, while the Revenue justified its use due to the assessee's failure to provide required documents. The tribunal found that best judgment assessment can be resorted to suo moto by the Central Excise Officer if the assessee fails to file the return or assess tax correctly. The tribunal dismissed the assessee's objections, noting that the SCN provided reasons for invoking best judgment assessment and that Form 26AS, used for assessment, could have been provided by the assessee.

Relevant Date for Reckoning Limitation:
The tribunal examined section 73(6) and concluded that the relevant date for reckoning limitation is the due date for filing the return if no return is filed by then. The tribunal rejected the Revenue's argument that the date of actual filing should be considered, stating that once the due date passes without filing, the relevant date is set, and subsequent filing does not alter it. The tribunal upheld the Commissioner's decision on the relevant date and limitation periods.

Invocation of Extended Period of Limitation:
The tribunal found that the reasons for invoking the extended period of limitation given in the SCN and impugned order were not sufficient to establish intent to evade tax. The tribunal noted that the demand was based on the assessee's records, which could have been scrutinized by the Range officer or audit team. The tribunal held that the extended period of limitation could not be invoked and sustained the demand only for the normal period of limitation.

Imposition of Penalties:
The tribunal set aside the penalty under section 78, as the elements required for its imposition were not present. The penalty under section 77(1)(c) was upheld, as the assessee failed to appear in response to summons and produce documents. The penalty under section 77(2) was set aside due to lack of specific violations mentioned. The late fee under section 70 was upheld as it is a statutory fee.

Conclusion:
Service Tax Appeal no. 51364 of 2018 filed by the Revenue was dismissed. Service Tax Appeal no. 50384 of 2018 filed by the assessee was partly allowed, upholding the demand of service tax with interest for the normal period of limitation, late fee under section 70, and penalty under section 77(1)(c). The demand for the extended period of limitation and penalties under sections 77(2) and 78 were set aside. The assessee is entitled to consequential relief, if any.

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