Notice issued based on AG Audit objection - AG drops para - Department wants duty
IT is often said that the department is a major litigant before the judiciary and is responsible for chocking the appellate forums. Here is an example.
The officers of CAG raised an objection that the assessee is not entitled for an exemption. Once there is an objection by CAG, whether the department accepts it or not, there should be a protective demand. So, a Show Cause Notice was issued to the assessee. Department contested the audit objection and in a rare gesture, the CAG dropped the para. The Adjudicating Authority (also in a rare gesture) dropped the demand.
Now, the department felt that the Adjudicating Authority was wrong in dropping the demand and filed appeal with the Commissioner (Appeals). The Commissioner (Appeals) in not so rare a gesture upheld the demand. On appeal filed by the assessee, the Tribunal has recently set aside the demand.
Perhaps the litigation-loving department will now go in for appeal to the Supreme Court against the CESTAT Order.
Is there any justification to demand duty when the Audit itself had closed the para, most probably based on the department's reply that there is no case on merits? How can the department take two contrary stands before the CERA audit and the CESTAT?