👍👍👍👍👍👍😉Extended Limitation Period Not Universally Applicable; Context Matters: SC

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Commissioner of CGST And Central Excise Vs Birla Corporation Limited (Supreme Court of India)

The Supreme Court of India recently addressed the issue of invoking the extended period of limitation for issuing Show Cause Notices (SCNs) in a tax case. In the case of Commissioner of CGST and Central Excise v. Birla Corporation Limited, the court dismissed the appeal filed by the Revenue Department, emphasizing that the extended period of limitation should be applied based on the unique circumstances of each case.

Supreme Court dismissed the appeal filed by the Revenue Department, holding that the extended period of limitation for issuing Show Cause Notice (SCN) has to be invoked as per facts of the case, thereby denying the benefit of the extended period of limitation to the Revenue Department.

Facts:

The Revenue Department (“the Appellant”) issued the SCN to M/s. Birla Corporation Limited (“the Respondent”) demanding Rs. 3,41,13,776/-.

The Appellant vide Order-in-Original No. 25/COMMR/CEX/JBP/2020 dated March 30, 2021 (“the OIO”), dropped the demand amounting to Rs. 3,41,13,776/- and conformingly raised the demand for payment of Excise Duty of Rs. 49,27,427/- along with an equivalent penalty of Rs. 49,27,427/- under Section 11AC of the Central Excise Act, 1944.

Aggrieved by the OIO, the Respondent filed an Appeal before the CESTAT, Delhi (“the Tribunal”) on the ground that the SCN was issued beyond the period of limitation and there was no intention to evade payment of tax, therefore, an extended period of limitation cannot be invoked, wherein the matter was remanded back to the Appellant for adjudication.

However, as per Final Order No. 50384/2023 dated March 23, 2023 (“the Impugned Order”), the Tribunal allowed the appeal and set aside the OIO, holding that the entire demand raised was time-barred. The Tribunal opined that it is the Respondent’s responsibility to self-assess and file the required returns. However, the Appellant must scrutinise the returns and call for any information required.

Respondent contended that several rounds of the audit were conducted by the Appellant and a similar type of SCN was issued during the previous period on the same issue. Thus, the Appellant was fully aware of the issue and it was the duty of the Appellant to scrutinize the returns and issue SCN within time.

Aggrieved by the Impugned Order, the Appellant filed an Appeal before this Hon’ble Supreme Court for setting aside the Impugned Order, on the ground that it is the responsibility of the Appellant to scrutinise the return and issue SCN within the normal period of limitation.

Issue:

Whether the extended period of limitation can be invoked only on the ground that the returns are not scrutinised on time and records are not called by issuing of SCN?

Held:

The Hon’ble Supreme Court in Civil Appeal No. 6410 of 2023 held as under:

• Observed that, five audits for the relevant period have been conducted by the Appellant and similar SCN has been issued by the Appellant for the same issue.
• Held that, the observations made in the Impugned Order, enumerating upon the duty of the Officer to scrutinise the returns and issue SCN within time, have been made in reference to facts and circumstances of the case, and do not have any general application, thereby holding that extended period of limitation cannot be invoked.

Conclusion:

The Supreme Court’s decision in this case reaffirms the principle that the extended period of limitation for issuing tax notices should be applied selectively, taking into account the individual facts and circumstances of each case. It emphasizes the need for a case-specific approach rather than a universal application of the extended limitation period.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

Learned Additional Solicitor General appearing for the appellant submitted that the observations of the Tribunal in paragraph 12 of the impugned final order would become a precedent in subsequent cases as those observations are general in nature and, therefore, would be followed by the Tribunal in other cases.

We do not agree with the said contention of learned ASG for the simple reason that those observations have been made in the context of what has been stated by the Tribunal in paragraph 13 of the impugned final order wherein details of as many as five audits for the relevant periods have been noted by the Tribunal and, therefore, in the facts and circumstances of the said case, the Tribunal held that the Department could not have the benefit of the extended period of limitation.

Since, the observations in paragraph 12 are relatable to the  peculiar facts of this case, we think that they cannot be construed to be observations to be applied in general in all cases de hors the facts of the particular cases.

With the aforesaid observations, the Civil Appeal is dismissed.

Pending application(s) shall stand disposed of.

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