SCN after ADT 02

[Narayan Pujar]

Hi,

Can a SCN be issued based on new issues after objections in ADT 02 has been accepted and paid? Are there any case laws to support that no such SCN can be issued?

[Sadanand Bulbule]

Dear Sir

In terms of Section 65[6], once ADT-02 is issued means, it signifies the conclusion of audit proceedings and accordingly the auditee needs to comply its observations. However the authorities may initiate proceedings under Section 73/74 based on cogent evidences indicating suppression of facts/evasion of tax received from external & reliable sources under Section 65[7].

Since there is a fresh SCN, double check your facts and answer it properly.

Case law:

The Hon'ble Madras High Court judgement dated 30/01/2024 rendered in the case of M/s. ABT Limited Vs. Additional Commissioner of GST & Central Excise. - 2024 (2) TMI 130 - MADRAS HIGH COURT in favour of the department.

[KASTURI SETHI]

Reply to the first question is 'YES'. The conclusion of audit cannot be treated as clean chit for ever. Please note that all facts never come to the notice of the visiting audit team during audit. If any wing of the department detects a new issue, afresh SCN can be issued.

I fully concur with the views of Sh.Sadanand Bulbule, Sir.

[Shilpi Jain]

You can note one further point in this regard, the subsequent SCN cannot be issued u/s 74 invoking the extended period of limitation assuming that the aspect on which the SCN is now issued was not deliberately with-held from the department during audit.

[Narayan Pujar]

Thank you all for taking out time to respond.

Kasturi sir, even I believe SCN can be issued for newer objections, because there is no explicit provision preventing the dept from doing so.

By saying so, logically, will that not render the audit process and ADT 02 meaningless? 

If the dept just wanted information to issue a SCN it could have simply made an enquiry in Sec 70. Why the entire process of audit then? What meaning does 'conclusion of audit' in Sec 65(6) hold, if the dept can issue a SCN by raising points beyond ADT 02?

[Sadanand Bulbule]

Mr.Narayan

Under taxation, no proceedings are final. Its a snake and ladder game and facts are dice. Play with mind. Even supreme court overrules its own judgements. As a taxpayer he is bound to comply the notices however he is perfect and he cannot question the wisdom of the Parliament.

Do your duty and let them do their duty. Why fret about SCN when you are right?

[Sadanand Bulbule]

Dear all

There would be a sense of distrustfulness to such taxpayers in this process, but in the end it arrives at the truth. 

[KASTURI SETHI]

Sh.Narayan Pujar Ji,

My views are as under :-

"By saying so, logically, will that not render the audit process and ADT 02 meaningless ?

Not agreed.

If the dept just wanted information to issue a SCN it could have simply made an enquiry in Sec 70. Why the entire process of audit then ?

Every Section has its own statutory function and objective.

What meaning does 'conclusion of audit' in Sec 65(6) hold, if the dept can issue a SCN by raising points beyond ADT 02 ?

Here 'conclusion' means 'the end'' At the end of the duration of visit. Normally auditing last for 7 days depending upon the size of the unit.

Non-levy or short-levy of GST cannot be allowed under any circumstances under any Act. Recovery can be made if such short levy or non-levy falls within prescribed time limit. There are other wings in the department for this purpose i.e. Preventive Branch (Flying squad), GST Range Office, GST Division Office, Valuation Branch, Technical Branch, Adjudication Branch etc.

My views are impartial, unbiased and unprejudiced.

I think there is no room left for further doubt as Sh. Sadanand Bulbule, Sir has also already expressed in a lucid manner.

[SHARAD ANADA]

SCN STAY WHEN Sec 65 concluded and accepted - GAUHATI HC Ms Surya Business Private Limited vs. State of Assam - 2023 (11) TMI 602 - GAUHATI HIGH COURT & 2024 (1) TMI 1345 - GAUHATI HIGH COURT

[KASTURI SETHI]

Dear Sir,

O.K. SCN has been stayed but Section 65 (6) is not meant for issuance of an order. It is an intimation regarding the findings of audit.

 Anyhow, let us wait for the final decision on the issue.

 

AI Summary

Show-cause notices after audit conclusion: fresh evidence can prompt SCNs, subject to limitation and concealment rules. The audit conclusion under ADT-02 functions as an intimation of findings at the end of the audit visit and does not automatically bar subsequent issuance of an SCN where credible external or newly discovered evidence indicates suppression or evasion; however, extension of limitation periods for such proceedings requires a showing of deliberate concealment and judicial stay may be available in particular factual circumstances.