¹[(1) The Commissioner or the appropriate officer mentioned in the table of section 86 may issue primary show cause notice to a person to determine the amount of tax payable by such person in the following cases, namely:-

(a) if, on examination of return‚ the Commissioner or the appropriate officer mentioned in the table of section 86 is not satisfied as to the accuracy of such return or reasonably believes that-

(i) in such return, the person has made false or untrue statement in respect of output tax, supplementary duty or an increasing adjustment or a decreasing adjustment; or

(ii) in a turnover tax return, such person has made a false declaration in respect of his turnover for any tax period;

(b) if such person fails to file a return within the prescribed time;

(c) if such person fails to pay or evades or avoids the payable tax; or

(d) if such person has been paid a refund or given a drawback to which he was not entitled.

(2) If the person on whom tax is assessed under sub-section (1) raises an objection in writing against the said notice within the period specified in the show-cause notice under the said subsection, he shall be given an opportunity of hearing, after considering that objection raised by the person, the concerned Commissioner or the appropriate officer specified in the table of section 86 shall, within 120 (one hundred twenty) days of the filing of the said objection, which shall not include the time allowed in view of the application of the said person or, if no objection is filed, may determine the final tax within 120 (one hundred twenty) days from the date of issue of the notice under the said sub-section by finalizing the notice, which shall, along with other necessary particulars, contain the following matters, namely:-

(a) the reason for such tax determination, the amount of tax payable as a result of the determination and a description of the basis on which such amount of tax is determined;

(b) the date by which such tax shall be paid; but such date shall be at least 15 (fifteen) working days after the date on which the notice is served; and

(c) the time and place of filing appeal against such tax determination.

²[(2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), if there is any failure or irregularity or element of tax evasion arising out of the said assessment situation, the matter of imposition of penalty under section 85 may be included in the primary show-cause notice in relation to tax assessment and along with finalizing the assessment of tax through finalization of such notice, the matter of imposition of penalty will also be finalized.]

(3) The Commissioner or the appropriate officer mentioned in the table of section 86 shall not make a tax determination, including an amended tax determination, for a tax period at the expiry of 5 (five) years, but in case of hundred percent export-oriented industry at the expiry of 3 (three) years after such tax period, unless-

(a) a registered person wilfully neglects or commits a fraud in filing a return; does not file the return for any tax period; or claims a refund fraudulently for such tax period; or

(b) a registered person, in order to evade payment of taxes, conceals any information, or distorts it, or issues tax invoices with false information or intentionally commits these, or other offences; or

(c) an amended tax determination is required to give effect to a decision of a Court, the Appellate Tribunal or the Value Added Tax Authority.]

(4) Nothing in this section shall‚ in the following cases‚ prevent ³[the Commissioner or the appropriate officer mentioned in the table of section 86] from imposing and collecting any interest or penalty‚ namely:-

(a) in case of computation from the original date for payment of the payable VAT, supplementary duty or turnover tax; or

(b) in case of computation from the date on which a refund was paid to a person and a tax determination arises in order to make adjustment of such refunded money because such person was paid such refund to which he was not entitled.

⁴[(5) After examination of return, if any irregularity is detected of taking input tax credit or decreasing adjustment, an officer not below the rank of an Assistant Commissioner can determine the amount of tax payable following the method mentioned in sub-section (2).]