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Circulars Central Excise
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Inspection of prosecution work: ensure compliance with prosecution guidelines and address pendency and non-compliance in tax enforcement.
Inspection of prosecution work requires the Director General, Directorate of Performance Management and Chief Commissioners to inspect Commissionerates to verify scrupulous compliance with the Circular's guidelines for launching prosecution. Inspections must examine reasons for pendency and non-compliance in prosecution cases and ensure recording of statistical data during field visits to support oversight of prosecution performance.
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Compounding of offences for evasion under central excise and service tax allows the Principal Chief/Chief Commissioner to compound offences on payment of the compounding amount; Section 9A(2) of the Central Excise Act as applied to service tax via section 83 of the Finance Act authorises this, and circulars require that persons against whom prosecution is initiated or contemplated be informed in writing of the offer to compound.
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Prosecution guidelines: sanctions granted after the circular govern cases regardless of offence date, with sanctioned cases reviewed.
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Withdrawal of prosecution permitted after final exoneration in parallel quasi judicial proceedings; formal application required to seek withdrawal.
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Publication of convicted persons' names may be sought by the department through courts under central excise and service tax law.
Power exists under the Central Excise statutory framework, as applied to service tax by the Finance Act, to publish the name and place of business of persons convicted under the relevant enactments; courts have exercised this power sparingly, and the department is directed to request courts to invoke this publication power in deserving cases for all convicted persons.
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The Principal Commissioner/Commissioner must monitor prosecution files monthly, take corrective action where necessary, and inspect the prosecution register in the Prosecution Cell at least once every quarter. Designated supervisors in zonal investigative units must oversee prosecution work. Prosecution registers in prescribed formats are to be maintained, regularly updated and kept in the Commissionerate Prosecution Cell and in zonal units to enable systematic tracking of prosecution cases.
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Prosecution Sanction: mens rea and evidentiary sufficiency determine whether tax evasion prosecution proceeds.
Prosecution proposals for service tax or excise evasion must be examined and forwarded by the adjudicating authority to the sanctioning Principal Chief/Chief Commissioner or Principal/Director General; prosecution requires evidence of mens rea and should not be launched in purely technical or interpretation disputes. Criminal standards (beyond reasonable doubt) must be weighed separately from adjudication findings; prosecution may be initiated before adjudication in serious cases. Investigation reports must be prepared within one month and sanction obtained prior to filing; authorised officers must secure exhibits and coordinate with public prosecutors, with reporting obligations for delays and monthly updates to the sanctioning authority.
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Sanction for prosecution: designated senior authorities must authorize and formalize prosecution before filing criminal complaints.
Sanction for prosecution is required before initiating criminal complaints in service tax and central excise matters. The Principal Chief/Chief Commissioner must sanction routine cases, while the Principal Director General/Director General, CEI must sanction cases investigated by the Directorate General of Central Excise Intelligence. The sanctioning authority issues a written order and forwards it to the Commissionerate for expeditious filing of the complaint.
Circulars Central Excise
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Habitual evasion: prosecution permitted where repeated confirmed demands and substantial cumulative tax evasion or credit misuse.
Prosecution may be initiated against a company or assessee classified as a habitual evader where multiple confirmed demands (at first appellate level or above) for Central Excise duty or Service Tax, or findings of Cenvat credit misuse arising from fraud or suppression, occur within a prior period and the cumulative duty or tax evaded or credit misused meets a substantial monetary threshold; the Offence Register (335J) may be used to identify such assessees.
Circulars Central Excise
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Prosecution threshold: prosecution requires evasion exceeding the prescribed monetary limit before proceeding for excise or service tax offences.
Prosecution for evasion of Central Excise duty or Service Tax, or misuse of Cenvat credit in relation to offences specified under sub section (1) of Section 9 of the Central Excise Act, 1944 or sub section (1) of Section 89 of the Finance Act, 1994 should normally not be launched unless the evasion meets or exceeds the prescribed monetary threshold set out in the departmental guideline.
Circulars Central Excise
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Corporate criminal liability: officers and partners can be prosecuted for company service tax or excise evasion.
Persons in charge of and responsible for a company's business are prosecutable alongside the company for service tax or central excise evasion; where an offence by a company is shown to involve the consent, connivance or neglect of a director, manager, secretary or other officer, that individual is deemed guilty. The statutory definition of company includes firms and associations and treats a partner as a director, extending corporate liability principles to service tax prosecutions.
Circulars Service Tax
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Swachh Bharat Cess applicability: applies to all taxable services except services fully exempt or not leviable to service tax.
Swachh Bharat Cess applies to all taxable services except those that are fully exempt under a statutory notification or are otherwise not leviable to service tax; the cess was imposed by government authority to cover the taxable service base while preserving existing exemptions and non leviability rules.
Circulars Service Tax
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Cenvat credit reversal does not require separate reversal of Swachh Bharat Cess under the applicable rule per FAQ.
The circular states that Swachh Bharat Cess is not integrated into the Cenvat credit chain; the reversal under Rule 6 requires payment based on the value of exempted services, and therefore a separate reversal of Swachh Bharat Cess is not required when reversing credit under Rule 6 of the Cenvat Credit Rules.
Circulars Service Tax
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Point of taxation determines Swachh Bharat Cess liability; payment date triggers reverse charge cess on taxable service.
Point of taxation governs SBC liability for reverse-charge services: the date of payment is the point of taxation and SBC is payable on the value of the taxable service at the prescribed rate when consideration is paid to the service provider.
Circulars Service Tax
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Swachh Bharat Cess option for services under specified service-tax rule; SBC computed by prescribed formula and fixed for financial year.
Persons liable to pay service tax under the sub rules of rule 6 may elect to discharge Swachh Bharat Cess by applying a prescribed computation to their Service Tax liability; once exercised the election must be applied uniformly to such services and cannot be changed during the financial year.
Circulars Service Tax
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Swachh Bharat Cess on restaurant services is calculated on the value determined under Service Tax valuation rules, creating a combined levy.
Swachh Bharat Cess on restaurant services is payable on the taxable value determined under the Service Tax (Determination of Value) Rules, 2006; for restaurants, eating joints or messes with any air-conditioning or central heating, the cess and service tax are each applied to the portion of the total charge treated as taxable under those rules, and the combined levy is the sum of the service tax rate and the cess rate applied to that taxable portion.
Circulars Service Tax
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Service tax calculation for services under Rule 2A/2B/2C: apply combined service tax and SBC to the rule determined value.
Service tax and Swachh Bharat Cess on services governed by Rule 2A, 2B or 2C are computed by multiplying the combined service tax plus SBC rate by the value determined under the relevant rule. For works contract services, applying the combined rate to the rule specified taxable fraction of the contract value produces the operative tax liability; the same approach applies to restaurant and outdoor catering services.
Circulars Service Tax
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Point of taxation for Swachh Bharat Cess: levy applies where service, invoice and payment occur on or after commencement date.
Because SBC is a new levy on taxable services not in the Negative List or wholly exempt, the Point of Taxation Rules determine liability. SBC does not arise where payment and invoice are issued before the levy's commencement or where payment precedes commencement but invoice is issued within the short prescribed period. SBC is chargeable where service provision, invoice issuance and payment occur on or after the commencement date; it also applies if service is provided on or after commencement but payment was received earlier and invoice is not issued within the short post-commencement period.
Circulars Service Tax
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Cenvat credit of Swachh Bharat Cess disallowed; SBC not in Cenvat credit chain and not payable using credits.
Cenvat credit for the Swachh Bharat Cess (SBC) is not available because SBC is not integrated into the Cenvat credit chain; consequently SBC cannot be claimed as input credit nor paid using credits of any other duty or tax.
Circulars Service Tax
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Swachh Bharat Cess calculation: SBC applies same abatement percentage as service tax, on combined taxable rate.
Swachh Bharat Cess is to be levied on the same abatement percentage that applies to service tax; the notification prescribing abatement for service tax applies equally to SBC, so the combined rate (service tax plus SBC) is applied to the abated value to determine the effective levy.

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Comparison of section 356 "Appealable orders before Joint Commissioner (Appeals)." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

13 September, 2025

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Section 356 Appealable orders before Joint Commissioner (Appeals).

Income-tax Act, 2025

At a Glance

Clause 356 (Old Version) of the Income Tax Bill, 2025 (hereafter "Clause 356 (Old)"). It sets out appealability to the Joint Commissioner (Appeals) against certain orders of Assessing Officers below the rank of Joint Commissioner. It matters to assessees and the tax department (appeals cadre); affected parties include individual and entity taxpayers, and assessing/deductor/collector authorities where specified. Effective date or decision date: Not stated in the document.

Background & Scope

Statutory hooks: Clause 356 (Old) is placed in Chapter XVIII (APPEALS, REVISIONS AND ALTERNATE DISPUTE RESOLUTIONS), Part A.- Appeals, I.-Appeals to Joint Commissioner (Appeals) and Commissioner (Appeals). It addresses appealable orders before the Joint Commissioner (Appeals). Definitions: the clause includes a definition of "status" by reference to section 2(77). Other definitions or scope-limiting language: Not stated in the document beyond the text of Clause 356 itself.

Statutory Provision Mode

Text & Scope

Clause 356 (Old) provides that any assessee aggrieved by specified orders of an Assessing Officer (below the rank of Joint Commissioner) may appeal to the Joint Commissioner (Appeals). The enumerated appealable orders under sub-section (1) are:

  • (a) Intimation u/s 270(1) or 399(1) where the assessee objects to the making of adjustments;
  • (b) Order u/s 270(10) or 271 where the assessee objects to assessed income, determined tax, computed loss, or status;
  • (c) Order of assessment, reassessment or recomputation u/s 279;
  • (d) Order u/s 398;
  • (e) Order imposing penalty under Chapter XXI;
  • (f) Order u/s 287 or 288 amending any of the orders or intimations in clauses (a) to (e).

Sub-section (2) bars appeals where the impugned order is passed by or with the prior approval of an income-tax authority above the rank of Deputy Commissioner.

Sub-section (3) empowers the Board (or income-tax authority authorised by the Board) to transfer appeals between Commissioner (Appeals) and Joint Commissioner (Appeals), with the transferee continuing from the stage at which it was transferred.

Sub-section (4) mandates that where an appeal is transferred under sub-section (3), the appellant shall be given an opportunity of being reheard.

Sub-section (5) permits the Central Government to notify a scheme to dispose of appeals expeditiously "by eliminating the interface between the Joint Commissioner (Appeals) and the appellant, to the extent technologically feasible" and to direct that provisions relating to jurisdiction and procedure "shall not apply or shall apply with exceptions, modifications and adaptations."

Sub-section (6) allows the Board to specify that any provisions of this section shall not apply to any case or class of cases.

Sub-section (7) defines "status" by reference to section 2(77).

Interpretation

The text prioritises a statutory right of appeal for assessees from subordinate assessing officers' orders to the Joint Commissioner (Appeals) within specified categories. The presence of transfer powers (sub-section (3)) and rehearing requirement (sub-section (4)) suggests legislative intent to permit administrative flexibility while preserving procedural fairness. The scheme power in sub-section (5) reflects an intent to modernise and streamline appeal disposal (including technological interface reduction), and to permit modifications of jurisdictional/procedural rules to achieve that aim. Beyond these textual indicators, legislative purpose or debates are Not stated in the document.

Exceptions/Provisos

Key exceptions included within the clause:

  • Sub-section (2): No appeal to Joint Commissioner (Appeals) if the order was passed by or with prior approval of an authority above Deputy Commissioner.
  • Sub-section (5): Central Government may supersede certain procedural/jurisdictional provisions via notified scheme.
  • Sub-section (6): Board may carve out cases or classes of cases to which the section will not apply.

Illustrations

  • Example 1: A taxpayer objects to an adjusting entry in an intimation u/s 270(1) - under Clause 356 (Old) they may appeal to the Joint Commissioner (Appeals). (Illustrative facts not detailed in the document.)
  • Example 2: A taxpayer dissatisfied with a reassessment order u/s 279 - appealable to the Joint Commissioner (Appeals). (Not stated in the document whether time limits or form are prescribed.)

Interplay

Clause 356 (Old) cross-refers to multiple other provisions (sections 270(1), 399(1), 270(10), 271, 279, 287, 288, 398, Chapter XXI penalties, and section 2(77)). It creates transferability with Commissioner (Appeals) and contemplates a Central Government scheme that may alter application of other provisions of the Act relating to jurisdiction and procedure. Specific Rules/Notifications/Circulars that interpret or implement these powers are Not stated in the document.

Differences between Clause 356 (Old) and Section 356 (Act)

Summary of textual differences and their practical impact (based strictly on the two provided texts):

  • Who may appeal: Clause 356 (Old) uses the phrase "Any assessee, aggrieved by ..." (Document 2). Section 356 (Act) expands the class to "Any assessee or any deductor or any collector, aggrieved by ..." (Document 1).
    • Practical impact: the Act expressly allows deductors and collectors to appeal; the Bill's older text limited appeals explicitly to assessees only. This expansion in the Act broadens standing to appeal to include persons who operate as deductors/collectors, increasing potential appellants and workload for the appellate authority.
  • Clause (a) - nature of objection: Clause 356 (Old) states "where the assessee objects to the making of adjustments"; Section 356 (Act) states "where the assessee or deductor or collector objects to the adjustments made therein."
    • Practical impact: the Act clarifies and modernises language, aligning with inclusion of deductors/collectors and framing objection to adjustments already made ("adjustments made therein") rather than merely "making of adjustments," which may narrow ambiguity about timing/context of objection.
  • Sub-section (1) opening phrase and inclusivity of clauses: Clause 356 (Old) lists only "Any assessee, aggrieved..." and the clause (f) refers to "any of the orders or intimations in clauses (a) to (e)." Section 356 (Act) mirrors the structure but, because it includes deductor/collector, clause (f) references clauses (a) to (e) similarly.
    • Practical impact: principally the same technical catch-all for amendments to orders; effect depends on expanded class of appellants in the Act.
  • Sub-section (3)(a) drafting order and punctuation: Clause 356 (Old) text reads that Board may transfer "any appeal filed against an order referred to in sub-section (1) and any matter arising out of or connected with such appeal, which is pending before the Commissioner (Appeals), to the Joint Commissioner (Appeals);" Section 356 (Act) reverses subordinate phrase order: "any appeal filed against an order referred to in sub-section (1), which is pending before the Commissioner (Appeals), and any matter arising out of or connected with such appeal and which is so pending, to the Joint Commissioner (Appeals);"
    • Practical impact: mostly drafting clarity; Section 356 (Act) is marginally clearer about pendency and connected matters, reducing potential ambiguity over what may be transferred.
  • Definition of "status": Clause 356 (Old) states "In this section, 'status' means the category of person as defined in section 2(77) ..." while Section 356 (Act) states "For the purposes of this section and section 357, 'status' means the category of person as defined in section 2(77) ..."
    • Practical impact: the Act expressly links the meaning to section 357 as well; this ties interpretive clarity across adjacent provisions and may affect cross-reference interpretation.

Practical Implications

  • Compliance and risk areas: The clause delineates which subordinate assessing officer orders are appealable; practitioners must map disputes to the listed heads (intimations/assessment/reassessment/penalties/amendments). The allowance for transfers and scheme-based alterations means uncertainty may arise as to which forum will hear the appeal; clients should monitor Board notifications and Central Government schemes. Time limits, forms, or procedural requirements are Not stated in the document.
  • Record-keeping/evidence points: Given the appealability of adjustments and amended orders, maintaining clear audit trails for adjustments in intimations (section 270(1)/399(1)), reasons for reassessment, and any correspondence authorising amendments u/ss 287/288 will be important. The document itself does not prescribe specific records.

Key Takeaways

  • Clause 356 (Old) grants a statutory right of appeal to the Joint Commissioner (Appeals) for assessees against specified orders of Assessing Officers below Joint Commissioner rank.
  • The provision enumerates specific appealable orders: intimations involving adjustments, orders under specified assessment and penalty sections, and amendments u/ss 287/288.
  • Appeals are barred where the impugned order was passed by or with prior approval of an authority above Deputy Commissioner.
  • The Board/Central Government are empowered to transfer appeals between appellate authorities and to notify schemes that may alter procedural and jurisdictional rules, including technological interface elimination.
  • The clause defines "status" by reference to section 2(77), but other interpretive aids, time-limits, forms, and procedural details are Not stated in the document.

Full Text:

Section 356 Appealable orders before Joint Commissioner (Appeals).

Topics

Acts Income Tax