Audit, Adjudication and Appellate Procedure

1. Audit, Adjudication and Appellate Procedure By Kapil Vaish

2. Handling Service Tax Audit • Audit as per EA 2000 guidelines. • Conducted by Central Excise Officers. • Proprietorships or individual having turnover less than 60 lacs not liable to service tax audit. • Remaining assessees are audited regularly. No fixed time frame. • Advance intimation received. Further time may be sought. • Records to be produced for last 5 years. • Copies of ST 3 returns. • Challans. • General Ledger • Cenvat Credit Documents • Annual Accounts • Agreements/Contracts with customers.

3. Assessee should maintain proper records of all the services provided, cenvat taken, tax deposited. • Assessee to answer all queries of Audit Team. Need not be immediately. • Records can be removed by the Team only on written request. • Acknowledgment should be taken if records are removed. • No assessment can be made at the time of audit.

4. No compulsion to pay any amount alleged to have been short paid. Only admitted amounts may be paid. • After completion of audit, assessee is required to reply to the objections raised by the auditors through range office. • Unresolved issues result in issuance of show cause notice. • No power to issue summons or conduct physical verifications.

5. Show Cause Notices - Adjudication • For all demands/penalties/interest SCN issued u/s 73. • SCN to be specific with regard to allegations, period, amount, classification, value of services. • Department to provide all RUDs, statements and resumed documents. • Replies to be specific, giving • Brief facts • Allegations • Defence on First Principles • Limitation • Case laws • All relevant evidences like copies of contract, evidence of payments, Cenvat credit invoices, Expert opinion to be submitted alongwith defence reply. • If necessary Cross Examination may be sought. • Personal Hearing to be sought and attended.

6. Appeal to Commissioner (Appeals) (By the department) Section 84 – Even the department can file an appeal to CCE (A) against orders of adjudicating authorities lower then CCE. CCE to review the order and direct any CEO for filing the appeal to CCE (A). Aforesaid order to be passed within 3 months from the date of communication of the order. Appeal to be filed by the authorised officer within one month from the date of communication of order of CCE. Assessee may challenge the departments appeal on limitation if there is delay in reviewing the order or filing of appeal.

7. Appeal to Commissioner (Appeals)(By the Assessee) • Section 85 – Any assessee aggrieved by the order of any adjudicating authority subordinate to CCE may file appeal to CCE(A). • Appeal to be filed in prescribed format – ST 4 in Duplicate. • Appeal to be signed and verified by authorised person. • Appeal to accompany self certified copy of order-in-original. • Power of attorney should preferably be submitted along with appeal. • No filing fee. • Appeal to be filed within 2 months from date of receipt of order (time reduced from 3 months to 2 months by F.A 2012). • Time limit for all orders received upto 28-05-2012 shall continue to be 3 months. • Appeal may be on any issue relating to Service Tax(Short levy, non levy, taxability, classification), interest or penalty. • In case of delay in filing the appeal, COD application to be filed. • CCE may condone delay up to 1 month (reduced from 3 months by F.A 2012). • CCE has no power to condone delay beyond prescribed period. • All appeals to CCE (A) to accompany with application for dispensing with pre-deposit of tax, penalty and interest (Section 83 of F.A 1994 read with section 35F of Central Excise Act 1944).

8. Procedure before Commissioner (Appeals) • Opportunity for personal hearing on Stay Application. • Opportunity for personal hearing on Appeal. • Maximum 3 adjournments. • Written Submission. • Submission of Case Laws.

9. Format ST4 Form of Appeal to the [Commissioner of Central Excise (Appeals)] [Under Section 85 of the Finance Act, 1994 (32 of 1994)] 1. No........................ of ..................19........ 2. Name and address of the appellant. 3. Designation and address of the officer passing the decision or order appealed against and the date of decision or order. 4. Date of communication of the decision or order appealed against to the appellant. 5. Address to which notices may be sent to appellant. 5(A). (i) Period of dispute. (ii) Amount of service tax, if any, demanded for the period mentioned in Col. (i). (iii) Amount of refund, if any, claimed for the period mentioned in Col. (i). (iv) Amount of interest. (v) Amount of penalty. (vi) Value of the taxable service for the period mentioned in Col. (i). 6. Whether service tax or penalty or interest or all the three have been deposited. 6(A). Whether the appellant wishes to be heard in person? 7. Relief claimed in appeal.

10. STATEMENT OF FACTS GROUNDS OF APPEAL Signature of the authorised representative, if any Signature of the appellant VERIFICATION I, ............................, the appellant, do hereby declare that what is stated above is true to the best of my information and belief. Verified today, the ................................................ day of ........................ Place : ................. Date : ................. Signature of the authorised Signature of the appellant or his representative, if any. authorised representative. Note : The form of appeal including the statement of facts and the grounds of appeal shall be filed in duplicate and shall be accompanied by a copy of the decision or order appealed against.

11. APPEAL TO CESTAT

12. Appeal to CESTAT (By the Assessee) (Section 86) • Against the order of CCE or CCE(A), appeal lies to CESTAT. • Dehradun falls in Jurisdiction of Meerut-I Commissionerate. Appeals arising in Meerut-I commissionerate to lie in CESTAT, New Delhi. • Appeals to be filed within 3 months from the date of communication of the impugned order. • CESTAT has power to condone delay in filing . No time limit. Sufficient cause to be explained. • Appeal to be filed in prescribed format (ST 5), on legal paper in quadruplicate. • Appeal to essentially accompany:- • Draft towards filing fee • Application for dispensing with Pre-deposit of Tax, Interest & Penalty. • Certified copy of OIO and/or OIA. • Power of attorney. • Practically, Copy of show cause notice, Statements u/s 14 and other relevant evidences should also be submitted. • Court Fees Stamp to be affixed on Appeal and Impugned Order. • On receipt of notice for filing appeal by assessee, department may file cross objection within 45 days. May take pleas on which it preferred not to file the appeal.

13. Appeal to CESTAT (By the Department) (Section 86) • Even the department can file appeal to CESTAT against order of CCE and CCE (A). • Committee of Commissioners or Chief Commissioners to review the order and direct any CEO or Commissioner to file appeal to CESTAT. • Appeal to be filed within 3 months of the date of receipt of order. • On receipt of notice for filing appeal by department, assesse may file cross objection within 45 days. May take pleas on which he preferred not to file the appeal. • In case of difference of opinion in the members of committee , the matter to be referred to Chief commissioner/Board, who will take decision for filing the appeal.

14. Form ST 5 Form of appeal to Appellate Tribunal under Section 86 of the Finance Act, 1994 (32 of 1994) IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL Appeal No. ................................................................ of 19 ..................... ................................    ………………………………........................ Appellant Versus .........................…………………………………………………................ Respondent (1) The designation and address of the authority passing the order appealed against. (2) The number and date of the order appealed against. (3) Date of communication of a copy of the order appealed against. (4) State/Union Territory and the [1][Commissionerate] in which the order/decision of assessment/penalty/ interest was made. (5) Designation and address of the adjudicating authority in cases where the order appealed against is an order of the [2][Commissioner (Appeals)]. (6) Address to which the notices may be sent to the appellant. (7) Address to which the notices may be sent to the respondent.

15. (8) Whether the decision or order appealed against involves any question having a relation to the value of the taxable service for purposes of assessment; if not difference in tax or tax involved, or amount of interest or penalty involved, as the case may be. (8A) (i) Period of dispute.  (ii) Amount of tax, if any, demanded for the period mentioned in item (i).  (iii) Amount of refund, if any, claimed for the period mentioned in item (i).  (iv) Amount of interest involved.  (v) Amount of penalty imposed. (9) Whether tax or penalty/interest is deposited; if not, whether any application for dispensing with such deposit has been made. (a copy of the challan under which the deposit is made shall be furnished). (9A) Whether the appellant wishes to be heard in person. (10) Reliefs claimed in appeal.

16. STATEMENT OF FACTS GROUNDS OF APPEAL (i)  (ii)  (iii)  (iv)  Signature of authorised representative, if any. Signature of the appellant. VERIFICATION I, ..........................., the appellant, do hereby declare that what is stated above is true to the best of my information and belief. Verified today, the ................……………………........... day of ....…………………................... 19....... Signature of the authorized Signature of the appellant or his representative, if any. authorised representative. Notes : (1) The appeal including the statement of facts and the grounds of appeal shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be certified copy). (2) The form of appeal shall be in English (or Hindi) and should set forth, concisely and under distinct heads, the grounds of appeal without any argument or narrative and such grounds be numbered consecutively. (3) The fee of Rs. 200/- required to be paid under the provisions of the Act shall be paid through a crossed bank draft drawn in favour of the Assistant Registrar of the Bench of the Tribunal on a branch of any nationalised bank located at the place where the Bench is situated and the demand draft shall be attached to the form of appeal.

17. Procedure in CESTAT • In the present system Stay Application/Appeal is listed within 3 days of filing. • Cases involving taxability, classification, valuation are listed before DB. • Cases involving more than Rs 10 lacs are listed before DB. • Cases involving less than Rs 10 lacs are listed before Single member bench. • Chartered Accountants can appear as authorised representatives. To wear the Prescribed dress.