Page 108 - GSTL_18th June 2020_Vol 37_Part 3

322 GST LAW TIMES [ Vol. 37
the letter, dated 23-1-2014 supposed to have been issued by the Additional
Commissioner vide C. No. III/10/232/2012 IA (S.T.), dated 23-1-2014. When the
very question of “visit of officers for audit” at the premises of the appellants is
denied by the appellants, the onus is on the department to prove that audit was
really conducted at the Unit by adducing sufficient evidence.
2.5 Even after repeated denial by the appellants that “no such audit of
Unit has taken place by the authorities”, the department never bothered to sub-
stantiate such allegation with material evidence. Neither, there is an observation
in the orders of the lower authority/lower appellate authority that they had in-
spected the Audit Register maintained for all such visit for audit purposes nor
provided copy of such extract to the appellants as proof of such audit.
2.6 In terms of clarification Circular, dated 8-8-2013 issued by the de-
partment vide C.B.E. & C. Circular No. 170/5/2013-S.T., dated 8-8-2013, Serial
No. 9, will clarify as to what constitutes “initiation of audit”.
2.7 It is mandatory for the audit officers to maintain an audit register
for the visit they have made in order to prove that actual audit was conducted in
the premises of the assessee. In the present case, none of the authorities below
had bothered to call for the audit register to ascertain the fact. The appellant
submits that if at all an audit was conducted at their premises, the department
would have recorded the same in the register maintained by them.
2.8 The appellants submit that it is evident from the letters of the de-
partment that they called for certain documents to conduct an audit. The appel-
lant submits that mere calling of documents to conduct audit does not mean “ini-
tiation of audit. It is mandatory that “physical visit of the audit officials should have
taken place at the premises of the assessee” in order to reject their application under
VCES. In the light of the above, the appellant submits that the order of the lower
authority is liable to set aside and the appeal is to be allowed.
3. The Learned Authorised Representative for the Revenue Shri L.
Nandakumar, AC (AR) supported the findings in the impugned order. He re-
ferred to Section 106(2) of the Finance Act, 2013 (Amendment) and submitted
that as per Clause (b), when an audit is initiated or when an investigation or au-
dit is pending as on 1-3-2013 the VCES application cannot be accepted. In the
present case, the department had issued a letter dated 3-9-2012 to the appellant
calling for documents. Later, the department had visited the premises on 26-11-
2012. Since the audit party had visited the premises on 26-11-2012, there is initia-
tion of audit and, therefore, VCES has been rightly rejected.
4. Heard both sides.
5. For the better appreciation of the issue under consideration, the rele-
vant provision contained in Sec. 106(2) is reproduced as under :-
“Section 106(2) : Where a declaration has been made by a person against
whom,
(a) an inquiry or investigation in respect of service tax not levied or not
paid or short levied or short-paid has been initiated by way of -
(i) Search of premises under Section 82 of the Chapter; or
(ii) issuance of summons under Section 14 of the Central Excise
Act, 1944, as made applicable to the Chapter under Section 83
thereof; or
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