AG's Audit Objection - No Immediate and Compulsory Show Cause Notice - CBEC Issues Revolutionary Circular - Ease of Doing Business at its best
FEAR of Audit and Vigilance is said to be the major reason for the ridiculous notices and absurd orders passed by the otherwise brilliant officers of the IRS.
In Circular No. 5/83-CX.6 (F.No. 210/29/81-CX.6) dated 10-3-1983, CBEC had directed, inter alia, that immediately on receipt of objection from the Accountant General's Audit Party, demand-cum-show-cause-notice should be issued without any loss of time even if the Central Excise Officers do not agree with the Audit's point of view and such demand-cum-show-cause notice may be withdrawn where Department's stand is ultimately accepted by the Accountant General's Office and the objection is settled.
I have great pleasure in reporting exactly 33 years after that demonic circular was issued that it is consigned to the dustbin of history and is no more valid.
Board has taken a bold decision that every objection by CAG's Audit will not result in a Show Cause Notice. The CAG was responsible for creation of thousands of Show Cause Notices and perennial litigation at all stages. In a comprehensive and clear circular leaving no scope for ambiguity or further interpretation, Board has clarified/directed that:
1. No Show Cause Notice should be issued in cases where department has not agreed with the audit objection on merits.
2. In cases where department has agreed to the merits of the objections, Show Cause Notices should be issued immediately.
3. Where a contested audit objection has become DAP and on examination it is found by CBEC that the objection should have been admitted, necessary directions may be given to the field to issue show cause notice and adjudicate the case on merits.
Instructions on adjudications: While emphasizing that the Adjudicating Authority is a quasi-judicial authority and is legally bound to adjudicate the case independently and judiciously, certain veiled instructions are given:
1. Adjudication should take into consideration the audit objection by CERA/CRA, reply of the department as referred above, reply of the party, relevant legal provisions, case laws on the subject and relevant circulars of the Board, if any.
2. It is expected that the factum of SCN being a consequence of CERA/CRA objection, would be incorporated in the brief facts of the case in the adjudication order.
3. Where an issue was under audit objection and has been subsequently either judicially settled, by say judgment of Hon'ble Supreme Court or where a circular of the Board has been issued on the subject, further correspondence with the Board on the audit objections, even if they have become DAPs, is not necessary and such cases may be adjudicated on merits taking into consideration the latest judgments and circulars.
4. While adjudicating, it should be ensured that the reply given by the department is available on record.
No Call Book: the procedure of transferring the show cause notice arising out of CAG objection to call-book has been discontinued and in future no such show cause notice should be transferred to the call-book.
This is one of the best circulars issued by the Board in recent times and is sure to promote ease of doing business and reducing litigation. The circular has been drafted in precise language with absolute clarity in thought and expression. The directions are straight and clear. This is a template for Board Circulars. DDT congratulates all those responsible in CBEC for issuing such an exemplary circular.
Now is the time for the field officers to show their brilliance and independence and above all their decision making capabilities are under test. They should have the ability to challenge the audit view and take the decision not to issue Show Cause Notices. The Board has done its job, will the field officers do theirs?
CBEC Circular No. 1023/11/2016-CX, Dated: April 8, 2016