Enhancing period of limitation to 2 years - some stray thoughts!
WE received this mail, purportedly from an officer in the department -
The Audit had raised an objection in respect of an assessee in my Range and pursuant to which a demand of CE duty was required to be issued. This objection was communicated in the the first week of February, 2016. Accordingly, I had worked out the demand for the normal period of one year and issued the SCDN on 22 nd February 2016 by invoking section 11A of the CEA, 1944 as it existed then. I later noticed that the misfeasance on the part of the assessee was also prevalent for the prior period but that would have required invoking of the extended period of limitation and which in the facts of the case was a debatable thing.
Incidentally, the Finance Bill, 2016 proposed raising the normal period of limitation to "two years" and which brought a smile on my face.
Under the category 'Amendments in the Central Excise Act, 1944', the TRU letter D.O F.No.334/8/2016-TRU dated 29th February 2016 curtly informed -
Section 11A is being amended so as to increase the period of limitation from one year to two years in cases not involving fraud, suppression of facts, willful mis-statement, etc.
The Finance Bill, 2016 has been enacted on the 14th May 2016.
After the enactment, I am faced with a dicey situation i.e. whether I can issue the demand notice for the period which I referred to earlier and which falls beyond the one year normal period but within the two year period of limitation OR whether I should attempt to issue the SCDN by invoking the extended period of limitation of five years.
There is no Board Circular/Instruction on the subject matter and no guidance note of any kind from the higher authorities.
The section 11A does not contain any Explanation clarifying the applicability of the new “two years” normal period of limitation nor is there presumably any saving clause which forbids applying the “two years normal period” to past evasion.
Actually, there are many schools of thought which are prevalent in our Commissionerate -
++ One says that I withdraw the SCN issued earlier (before the enactment) and now issue a fresh SCN invoking the two year normal period which would ably cover the period which I am concerned about;
++ Another says that I issue a demand notice invoking the extended period of limitation and even if the adjudicating authority or the appellate authorities come to a conclusion that there was no suppression etc., yet the possible offshoot would be that they confirm the demand for the normal period of limitation and which in the new set up would be the “two year period”. Resultantly, I achieve what I attempted in the first place!
But isn't this a mockery of the law?
Suppose I had not issued the demand notice in the first week of February (not that I had a premonition that the Finance Bill, 2016 would propose to increase the normal period of limitation from ‘one year' to ‘two years') then I would have been in a comfortable position and issued a single SCDN (after enactment) and which would have covered the two year period when the duty became due at the assessees end.
I request DDT to publish this quandary of mine so that netizens respond with their views and at the same time the benign Board spares time to issue an Instruction for the benefit of the grassroot level worker like me.
After all, Ease of working is the stepping stone for achieving Ease of Doing Business!