Central Board of Excise and Customs (CBEC) has issued a circular to simplify the procedure of dealing with audit objections raised in indirect taxes by the office of CAG. The Circular rescinds all the past circulars and instructions and prescribes a new simplified and consolidated procedure. The Circular No. is 1023/11/2016 CX dated 08/04/2016

Taking note of the fact that revenue and audit have agreement on large proportion of the audit objections, the revised Circular provides that demand notice, in cases of agreement on audit objection, should be issued and decided expeditiously. However, where revenue does not agree with the objections, no demand notice would be issued. Thus, where it is not necessary, an assessee would not be taken through the litigation cycle.

The Circular also highlights that adjudicating authority is a quasi-judicial authority and is expected to decide the case independently and judiciously. Regular coordination meeting between Revenue and CAG officers has also been prescribed for faster resolution of issues.

These revised guidelines have been issued in an effort to make the indirect tax administration assessee friendly and non-adversarial by bringing the audit objections to closure in an expeditious and fairer manner.

Audit objection procedure streamlined: agreement prompts expedited demand resolution, disagreement avoids demand notices, promoting non-adversarial tax administration. Circular consolidates and simplifies the procedure for dealing with CAG audit objections in indirect taxes: where revenue and audit agree a demand notice is to be issued and decided expeditiously, whereas where revenue disagrees no demand notice will be issued; adjudicating authorities are to decide independently and coordination meetings between revenue and audit officers are prescribed to expedite resolution and make administration more assessee friendly.