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Govt orders mandatory declaration of stock position of wheatCPI gets Rs 11 Cr tax notice for using old PAN numberGST - Penalty demand of Rs.3731 crores - A person who would fall within the purview of sub-section (1-A) of s.122 should necessarily be a taxable person who retains the benefits of transactions: HCGovt issues advisory against calls impersonating DoTFATP hand-wrings over slow regulation of crypto by member-countriesGST - Threatening and pressurising petitioner who is merely an employee - Highly unconscionable and disproportionate on the part of the officer: HCECI's C-Vigil app a big hit with votersGST - Same relief was claimed in earlier petition which was withdrawn unconditionally - Fresh petition seeking same relief is barred by the estoppel principle: HCIncome tax hands over Rs 1700 Cr tax demand to Congress PartyGST - Neither SCN nor the order spell out the reasons for retrospective cancellation of registration, hence cannot be sustained: HCStage-2 of Vikram-1 orbital rocket successfully test-firedGST - Non-application of mind - If reply was unsatisfactory, details could have been sought - Record does not reflect that such exercise was done - Matter remitted: HCHouthis claim UK has not capability to intercept their hypersonic missilesGST - Merely because a taxpayer has not filed returns for some period does not mean that registration is required to be cancelled with retrospective date also covering the period when returns were filed and taxpayer was compliant: HCIsraeli forces kill 200 Palestinians at Gaza medical complex & arrest over 1000GST - Petitioner's reply, although terse, is not taken into account while passing assessment orders - Petitioner put on terms, another opportunity provided: HCUnveil One Nation; One Debt Code; One Compliance Rule for Centre & StatesChina moves WTO against US tax subsidies for EVs & renewable energyMore on non-doms - The UK Spring Budget 2024 (See TII Edit)Training Program for Cambodian civil servants commences at MussoorieCBIC revises tariff value of edible oils, gold & silverCBIC directs all Customs offices to remain open on Saturday & SundayI-T- Once the citizen deposits the tax upon coming to know of his liability, it cannot be said that he has deliberately or willfully evaded the depositing of tax and interest in terms of Section 234A can be waived: HCHouthis attack continues in Red Sea; US military shoots down 4 dronesCus - No Cess is payable when Basic Customs Duty is found to be Nil: CESTAT
 
Audit: Frequently Asked Questions

DDT in Limca Book of Records - Third Time in a rowTIOL-DDT 2631
01 07 2015
Wednesday

THE Hyderabad Central Excise and Service Tax Audit Commissionerate has issued an FAQ on audit, which explains the rights and obligations of the assessees. All Commissionerates should give wide publicity to this and maybe every audit party should carry a copy and give to the assessee when they go for audit. Maybe it should be enclosed with the audit intimation.

Question 1: What is Central Excise/Service Tax Audit?
Ans: Audit is a verification of financial accounts and other records particularly records relating to production, clearance of goods or provision of service by the assessees to ascertain that duties of Central Excise / Service Tax are correctly paid.
Question 2: Who Conducts the Audit?
Ans: The Central Excise officers posted in Commissionerate of Audit conducts Audit which include Assistant / Deputy Commissioner, Joint / Additional Commissioner or Joint Director (Cost).
Question 3: When I file returns periodically to the department, what is the need of conducting audit?
Ans: The returns filed with the department are based on self-assessment. The correctness of the payment and application of statute are verified during the periodical Audits conducted by the department.
Question 4: Will assessee be audited every year?
Ans: The present periodicity of Central Excise audit:
1.Units paying more than Rs. 3 crores (PLA&Cenvat) Every Year
2.Units paying between Rs. 1 crore and Rs. 3 crores Once every two years
3.Units paying between Rs. 50 lakhs and Rs. 1 crore Once every five years
4.Units paying below Rs. 50 lakhs 10% of the units every year
For the categories mentioned at S. Nos. 2 to 4 of the above, the selection of units would be based on the unit-wise rupee risk parameters circulated by DG (Audit) combined with local risk parameters, if any. The quantum of annual duty payment in cash and cenvat are taken together for selection of unit.
The present periodicity of Service Tax audit:
1.Taxpayers paying more than Rs. 50 lakhs Every year
2.Taxpayers paying between Rs. 25 lakhs and Rs. 50 lakhs. Once in two years
3.Taxpayers paying between Rs. 10 lakhs and Rs. 25 lakhs Once in five years.
4.Taxpayers paying below Rs. 10 lakhs - 2% of the total number every year
For the categories mentioned at S. No. 2 to 4 the selection of assessees would be based on working on rupee risk (S1 parameter) and local risk parameters mentioned in the Service Tax Audit manual. The quantum of annual duty payment in cash and cenvat are taken together for selection of unit.
Question 5: What is the duration of the Audit?
Ans: It depends upon the quantum of the record to be scrutinized and period covered for audit. In any case it may spread from two days to ten days.
Question 6: Will it be a surprise audit?
Ans: No. A minimum of 15 days prior notice is served on the assessees regarding proposed audit.
Question 7: If I am registered for both Central Excise and Service Tax, whether two separate audits are conducted?
Ans: Simultaneous Audit for Central Excise, Service Tax and OSPCA would be conducted.
Question 8: If factory is registered in one Commissionerate, Service Tax registration is in another Commissionerate, where registered office is located, what is the criterion for selection of audit?
Ans: If both the registrations i.e., Central Excise and Service Tax are in Hyderabad zone, simultaneous audit would be conducted by Audit Commissionerate.
Question 9: If an assessee is having multi location manufacturing units, who conducts audit?
Ans: Normally audit for Hyderabad Zone registered units is conducted by Hyderabad Audit Commissionerate. Multi locational units' audit in a few cases would be taken up under the Co-ordination of Audit Directorate.
Question 10: Under what authority department conducts audit?
Ans: The statutory provisions relevant for audit is clause (x) of Section 37(2) and Rule 22 of the Central Excise Rules, 2002 for conducting Central Excise Audit and Rule 5A (2) of the Service Tax Rules, 1994 for Service Tax audit.
Question 11: Do I need to produce all my business records/documents?
Ans: Since there are no prescribed Central Excise records, records maintained by the assessees are requested for scrutiny. These may include, financial statements, invoices, ledgers, bank statements, cenvat credit documents, accounting policies etc., apart from statutory returns.
Question 12: How much time is given for production of records?
Ans: As an intimation of 15 days is given in advance, all records should be furnished to the audit team on or before their visit to the unit for audit.
Question 13: If records/accounts are maintained on a system using accounting packages like SAP/Tally/Focus etc., what is the procedure for conducting audit?
Ans: In such cases, normally Computer Aided Audit Programme is conducted. You are requested to produce the soft copy of the records and also the records maintained in physical form.
Question 14: Can I ask for postponement of audit due to prior business engagements?

Ans: Yes. In genuine cases on production of proper evidence, the competent authority may consider the request for postponement. Since the audit programme is drafted months in advance, postponements are not encouraged.

Who is this Competent Authority?

Question 15: Will I get to know the objections raised during audit?
Ans: Yes. The auditors discuss each and every objection they are going to raise and issue a spot memo. If assessees voluntarily rectify the error and corrects the same by payment of duty, interest and penalty etc., the para would be settled in MMCM. (What is this?)
Question 16: Can I get a copy of Final audit report?
Ans: Yes.
Question 17: How long does it take to receive Final Audit Report?
Ans: Normally within 15 days from the date of approval of audit report in Monthly Monitoring Committee meeting.
Question 18: Do I have opportunity to contest of (sic) the audit objection after receipt of Final Audit Report?
Ans: Yes, you may like to send your detailed reply to the concerned ADC/JC of the circle.
Question 19: What is the next cource (sic) of action if the Department do not agree with my reply?
Ans: A Show Cause notice is issued by the Audit Commissionerate answerable to respective competent authority in executive Commissionerate. The assessees written reply and submissions made in personal hearing will be considered and the case will be adjudicated.
Question 20: In case of grievance regarding the method of audit or behaviour of auditors, whom should I contact?
Ans: You may contact the concerned circle Additional Commissioner. The assessees are also provided along with final audit report, a feed-back form regarding quality of audit and suggestions for improvement of audit.
Question 21: Can I get guidance from the auditors regarding record keeping and application of law?
Ans: Yes. The auditors are professionally trained to guide, educate and encourage tax compliance.

The questions marked in red are those of DDT.

The Commissionerate has given a disclaimer - For general information - not statutory provisions.

FTP - Prohibition on Trade with Islamic State in Iraq and Levant (ISIL)

IN compliance with United Nations Security Council Resolution No. 2199 [2015] trade in oil and refined oil products, modular refineries and related materials, besides items of cultural (including antiquities), scientific and religious importance is prohibited with the Islamic State in Iraq and the Levant [ISIL], Al Nusrah Front [ANF] and other individuals, groups, undertakings and entities associated, directly or indirectly, with Al Qaida.

DGFT Notification No. 14/2015-2020, Dated: June 30, 2015

Import of certain categories of processed metallic scrap, at designated ports

DGFT has inserted paragraph 2.54 A in the Handbook of Procedures of FTP 2015-20, and Appendices 2N-2, 2G-1 and 2FI-1 in Appendices and Aayat Niryat Forms of FTP 2015-20:

Import of processed metallic scrap, may be allowed at designated ports (with Scanner/RDE facility), as listed in Appendix 2G-1 of Appendices and Aayat Niryat Forms of FTP 2015-20, without PSIC subject to fulfillment of certain conditions:-

(a) The importer shall have to submit a self declaration cum legal undertaking, as given in Appendix 2 N-2 of Appendices and Aayat Niryat Forms of FTP 2015-20, along with a Pre-shipment Inspection Certificate in Format 2FI-1, issued by the Inspecting Agency/Scrap Yard.

(b) Importer shall furnish bank guarantee of Rupees 10,00,000/- (Rupees ten lakh) to the Customs as security amount.

(c) Importer shall also have to submit a copy of contract with the exporter stipulating that the consignment does not contain any type of arms, ammunition, mines, shells, cartridges, radioactive contaminated material, or any other explosive material.

(d) All scrap consignments, so imported at the designated ports, shall have to compulsorily pass through the Scanner / Radiological Detection Equipments (RDEs), installed at these ports, before being cleared by the Customs.

DGFT Public Notice No. 23/2015-20 New Delhi: Dated June 30, 2015

Tariff Values Decreased

THE Government has decreased the Tariff value of Gold from 385 USD to 382 USD per 10 grams and Silver from 519 USD to 516 USD per kilogram.

Tariff values of Poppy Seeds and Areca Nuts remain unchanged. Tariff Values of oils are decreased. Brass scrap also sees a downward trend.

The Tariff values as on 15.06.2015 and with effect from 30.06.2015 are as under:

Table 1
S. No. Chapter/ heading/ sub-heading/tariff item Description of goods
Tariff value USD (Per Metric Tonne) from 15.06.2015
Tariff value USD (Per Metric Tonne) from 30.06.2015
(1)
(2)
(3)
(5)
(6)
1 1511 10 00 Crude Palm Oil 680 662
2 1511 90 10 RBD Palm Oil 690 682
3 1511 90 90 Others - Palm Oil 685 672
4 1511 10 00 Crude Palmolein 701 683
5 1511 90 20 RBDPalmolein 704 686
6 1511 90 90 Others -Palmolein 703 685
7 1507 10 00 Crude Soyabean Oil 800 763
8 7404 00 22 Brass Scrap (all grades) 3592 3533
9 1207 91 00 Poppy seeds 2602 2602
Table 2
S. No.
Chapter/ heading/ sub-heading/tariff item
Description of goods
Tariff value USD from 15.06.2015
Tariff value USD from 30.06.2015
1 71 or 98 Gold, in any form in respect of which the benefit of entries at serial number 321 and 323 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed. 385 per 10 grams 382 per 10 grams
2 71 or 98 Silver, in any form in respect of which the benefit of entries at serial number 322 and 324 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed. 519 per kilogram 516 per kilogram
Table 3
S. No.
Chapter/ heading/ sub-heading/tariff item
Description of goods
Tariff value USD (Per Metric Tons) from 15.06.2015
Tariff value USD (Per Metric Tons) from 30.06.2015
1 080280 Areca nuts 2268 2268

Notification No. 65/2015-Cus.(N.T.), Dated: June 30, 2015

Income Tax e-filing is ready

THE e-filing portal of the Income Tax Department is ready to accept online filing of income tax returns with the new forms notified recently.

Najib Shah - New Chairman of CBEC - Please clarify Education Cess

Mr.Najib Shah will take over as the new Chairman of CBEC today. Sir, while there are a lot of issues crying for your attention, it will be a good idea to start your innings with a clarification on what happens to the accumulated credit of education Cesses lying in the CENVAT accounts of the assessees. The assessees are really concerned about this blocked up amount and the unconcerned silence of the Board. Will you ask your concerned officers to clarify the position as soon as possible?

WCO Photo Competition 2015 - Lithuania Entry

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Penalty on short payment detected by Audit

Comments on Answer given for Question 15:

MMCM means Monthly Monitoring Committee Meeting being chaired by Commissioner (Audit).

As regards payment of Penalty, prior to enactment of the Finance Bill, 2015, there were provisions in Central Excise and Service Tax law to the effect that in respect of the objections raised by Audit (where details were available in specified records), assessee can pay duty/tax, interest and penalty @1% of duty/tax per month (not exceeding 25% of duty/tax) and in such case SCN was not required to be served. Provisions of Section 11A (5), (6) and (7) of CE Act, 1944 and Section 73(4A) of Finance Act, 1994 be referred. These provisions have been omitted by the Finance Act, 2015.

Now, penalty in respect of the short payment or non-payment detected by Audit depends upon whether there was any fraud, suppression of facts, contravention with intention to evade payment of duty/tax etc. If short payment is not attributable to fraud, suppression etc. and duty with interest has been paid either before issuance of SCN or within 30 days from SCN, no penalty is payable as per the substituted Section 11AC(1)(a). There are similar provisions for service tax.

In view of the above, it is felt that penalty, if any, can be imposed only after following the adjudication process.

Settlement of Audit Para in MMCM on voluntary payment of duty, interest and PENALTY is not supported by any statutory provision.

The views expressed are personal views.

Posted by Shvetal Parikh
 
Sub: Penalty leviable in case of Audit findings

If audit detects the short levy, it implies that the assesse had suppressed the same from the department, thus suppression of facts and hence penalty is leviable in all cases of Audit

Posted by
 

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