Notice for Audit

[saket s]

Hi,

Is it possible under law that for a particular period Service Tax Commissioner issues a SCN and later Commissioner drops and issues a no demand adjudication order and after two years audit wing again issues a notice to conduct audit for the same period.

Pls enlighten.

Saket

[Mahir S]

Yes, it is possible.

The audit is being undertaken by the Audit Commissionerate irrespective of any notices issued and adjudicated by the the respective Commissionerate for the said past period.

Now Henceforth, and after the formation of a separate Audit Commissionerate, for any discrepancy during Audit, the SCN are issued by the Audit commissionerate itself and adjudicated by the respective Commissionerates.

[KASTURI SETHI]

I agree with the views of Sh.Mahir S. Sir. The Audit can be conducted by the Audit Commissionerate involving the period of SCN issued by the erstwhile Commissionerate but demand SCN cannot be issued again on the same issue for the same period to the same party inasmuch as the issue was very much in the knowledge of the department. (Since it was in the notice of erstwhile commissionerate, it would be treated as in the knowledge of the department, hence extended period cannot be invoked again.)

[Suryanarayana Sathineni]

Dear friend,

As already explained by others, Departmental proceedings are different from periodical audits by Departmental audit wing. Hence, the audit notice is only to conduct an audit between a particular range of dates. I think, in your case department audit is not being conducted year wise.

Further, the department cannot audit second time for the same period unless a special audit is ordered by the commissioner which is generally opted by the department in special circumstances

Regards

Suryanarayana

[saket s]

Thank you all for your views.

[KASTURI SETHI]

Sh.Surya Narayana Ji,

Yes Sir. Govt is empowered to conduct special audit of the records of the assessee under Section 14 AA of the Central Excise Act and Section 72 A of the Finance Act.

AI Summary

Audit notices: audit wing may re-examine past periods, but demand SCNs generally cannot be reissued for the same period. The audit wing may examine past periods irrespective of prior SCNs; the Audit Commissionerate conducts audits and may identify discrepancies while adjudication of any demand remains with the respective Commissionerate. A previous SCN followed by a no-demand adjudication is treated as departmental knowledge, ordinarily precluding reissuance of a demand SCN for the same issue and period or invocation of extended limitation. The government may order a special audit in exceptional cases.