Computation of limitation period

[Asked by Guest]

In section 11 of CE act and section 73 of Finance Act the Department is empowered to recover short paid/not paid duty by issue of show cause notice which is required to be served within a specified time (one year/six months) of relevant date. Further relevant date is either date of filing return or if no return is filed last day of filing return or in other cases date of payment. My question is what is the date of service of notice. Is it to be taken as date on which SCN is signed/prepared or date on which it is dispatched by post or any other means or it is the date on which assesse receives the show cause notice. What is the precedence set with regard to this date of serving notice.? Is there any supreme court order which is taken as ratio to decide any dispute with regard to date of issue and date of receipt of show cause notice.??

[RadheyShyam Mangal]

Section 37C(1) of CE Act provides that any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served by

a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgement due or by speed post with proof of delivery or by courier approved by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)], to the person for whom it is intended or his authorised agent, if any;

(b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended;

(c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.

As per Section 37C(2) , every decision or order passed or any summons or notice issued under this Act or the rules made thereunder, shall be deemed to have been served on the date on which the decision, order, summons or notice is tendered or delivered by post or courier referred to in sub-section (1)] or a copy thereof is affixed in the manner provided in sub-section (1).

Thus SCN has to be served on the person concerned and mere issue is not enough, If the Notice was issued and posted before the last date, but received after the last date, demand notice is not sustainable as it was not served in time as held in case of Sewing Systems Pvt Ltd V CC  (1991 (6) TMI 161 - CEGAT, NEW DELHI)= 1992 (62)ELT725 (CEGAT) , this was affirmed by SC also.

Further in case of State of AP V M Ramakishtaiah (1994 (2) TMI 260 - SUPREME COURT OF INDIA) = 1994 93 STC 406 SC, the Apex Court decided that if the Notice is served much beyond the date shown in the order, and there is no explanation for such delay, it must be presumed that order was made on the date it purports to have been made. It could have been made after statutory period was over. 

I think the issue is clear to you.

regards

AI Summary

Service of notice governs limitation - notice is deemed served on delivery or lawful affixation; mere issuance is insufficient.
Computation of limitation for recovery depends on actual service of the show cause notice; notices are deemed served on the date of tender, delivery, or lawful affixation when sent by registered post with acknowledgement, speed post with proof of delivery, approved courier, or affixed at business or residence. Issuance or dispatch before the limitation cut off but reception after that date does not satisfy service requirements, and unexplained belated service may lead courts to presume the order was made on the later date, potentially beyond the statutory period.