📰 𝗖𝗘𝗦𝗧𝗔𝗧 𝗗𝗲𝗹𝗵𝗶 𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗼𝗻 𝗘𝘅𝘁𝗲𝗻𝗱𝗲𝗱 𝗟𝗶𝗺𝗶𝘁𝗮𝘁𝗶𝗼𝗻 𝗣𝗲𝗿𝗶𝗼𝗱: 𝗣𝗿𝗶𝗼𝗿 𝗗𝗲𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁𝗮𝗹 𝗔𝘂𝗱𝗶𝘁𝘀 𝗣𝗿𝗲𝘃𝗲𝗻𝘁 𝗟𝗮𝘁𝗲𝗿 𝗜𝗻𝘃𝗼𝗰𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗘𝘅𝘁𝗲𝗻𝗱𝗲𝗱 𝗣𝗲𝗿𝗶𝗼𝗱 𝗮𝗳𝘁𝗲𝗿 𝗦𝗲𝗮𝗿𝗰𝗵

📢 In the case RETD. COL. SWARN KUMAR MAKIN & MAKIN DEVELOPERS PRIVATE LIMITED vs CGST, CU&CE DEHRADUN, the CESTAT Delhi ruled that the extended period of limitation under the Central Excise Act cannot be invoked if a taxpayer's records were previously audited by the Department with no incriminating findings.

🔍 𝗙𝗮𝗰𝘁𝘀 • 𝗖𝗮𝘀𝗲 𝗧𝗶𝘁𝗹𝗲: Retd. Col. Swarn Kumar Makin & Makin Developers Private Limited vs. CGST, CU&CE Dehradun • 𝗖𝗮𝘀𝗲 𝗡𝘂𝗺𝗯𝗲𝗿: Service Tax Appeal Nos. 51532, 51533, 51534 of 2017 [DB] • 𝗖𝗼𝘂𝗿𝘁: CESTAT Delhi • 𝗗𝗮𝘁𝗲: 30-Jun-2023

The petitioners were engaged in providing services related to Commercial and Industrial Construction and had regularly been subjected to audits, which found no issues. However, based on alleged tax evasion, the Department conducted a search at the petitioners’ premises in 2016, recovering financial records. Subsequently, a Show Cause Notice (SCN) was issued, invoking the extended period to impose additional demands and penalties. The petitioners contested this, arguing that audits in prior years did not raise valuation issues, and therefore, invoking an extended limitation period was unjustified.

𝗧𝗶𝗺𝗲𝗹𝗶𝗻𝗲: • Prior to 2016: Regular audits were conducted without adverse findings. • 2016: Department conducted a search and recovered financial records. • SCN Issued: Based on findings from the search, with the extended period invoked. • Appeal to CESTAT: Petitioner challenged the SCN and subsequent orders, arguing against the extended limitation period and disputing valuation methods.

𝗖𝗘𝗦𝗧𝗔𝗧 𝗙𝗶𝗻𝗱𝗶𝗻𝗴𝘀: CESTAT held that if audits did not reveal any discrepancy in valuation, then invoking the extended limitation period after a search is inappropriate. The tribunal found that the Department could not retroactively challenge the valuation as the petitioner had complied with previous assessments without any indication of suppression.

⚖ 𝗝𝘂𝗱𝗴𝗺𝗲𝗻𝘁: CESTAT quashed the extended period invocation and set aside additional penalties. It upheld that audits indicate Departmental approval of the petitioner’s valuation, and the burden of proof for any alleged evasion could not be imposed retroactively.

📜 𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻: This case reinforces that frequent audits, if unchallenged, establish an expectation of compliance. This decision is pivotal in service tax contexts, underscoring that the extended limitation period cannot be casually invoked, safeguarding businesses from retrospective demands. Team GSTpanacea 7503031378