Limitation period

[Shyam Naik]

Relevant date for the purpose of reckoning period of limitation for issuance of SCN under service tax is date of filing the service tax return. Whether the date of original return or the revised return shall be considered for the purpose of computing the limitation?

[KASTURI SETHI]

Date of filing of original return is legally valid date for computation of time limitation. By revising means just to make corrections to the original return already filed. By filing revised return means you are just revising the figures. Hence date of filing revised return cannot be considered for computing limitation.

[Ganeshan Kalyani]

I agree with the view of Sri Kasturi Sir.

[Shyam Naik]

Thank You very much.

Now I chanced upon on explanation to Rule 7B. It explains that the date of revised return is relevant date for section 73.

Shyam

[KASTURI SETHI]

Re-examined the issue. Yes you are right. It is in the Explanation to Rule-7B but not in Section 73 of the Act. I perused only the Act and not Rule 7 B.

[KASTURI SETHI]

By Rule 7B the department gets more time period to issue SCN for recovery of ST not paid/short paid. Naturally the department will prefer this rule.

Whenever there is a clash between the Act and Rule, the Act will prevail over the Rule. In Central Excise era, in one of the cases (Compounded Levy Scheme), penalties were imposed upon a large number of assessees under Rule but there was no statutory provision for imposition of penalty under Central Excise Act. All penalties were set aside by the Supreme Court and the department accepted that order of the Supreme Court.

AI Summary

Limitation period for SCN issuance: revised return date can extend departmental time to initiate recovery proceedings.
The operative issue is whether the filing date for computing limitation for issuance of a service tax show cause notice is the original return date or the revised return date; while one view treats the original return as the relevant date, an Explanation to an implementing rule treats the revised return date as extending departmental time to issue an SCN, creating a tension between the Act and subsidiary rule which must be resolved in favor of the statute where conflict exists.