By Puloma Dalal, Jayesh Gogri Chartered Accountants
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Is Rule 5A(2) of STR 1994 which prescribes for an access by authorised officer for verification etc. and for submission of records by assessee for Service Tax Audit ultra vires? Held, no.
Facts:
The Excise Department had issued intimations on various dates under Rule 5A(2) of STR 1994 calling for certain documents for conducting the EA-2000 audit. The appellant challenged the said intimations on the vires/legality of the said intimations under the ground that the same were contrary to the provisions of section 72 of the Finance Act. The appellant further argued that, the said Rule was arbitrary and it did not provide for details like the period of audit, the qualification and manner in which the said audit will be conducted, no provisions to furnish audit report to the assessee etc. The appellant also brought to the notice of the High Court that, in an identical case, the Delhi High Court in the case of Travelite India vs. UOI WP 3774 of 2013 had passed an interim order to maintain status quo.
Held:
The High Court observed that, section 72A of the Act is applicable when the assessee is not maintaining the books of accounts properly to ascertain the Service Tax liability and to determine the correct tax, the books will have to be examined and if need be, be audited by a qualified Chartered Accountant. Rule 5A only facilitates the provisions of section 72A, as Rule 5A( 2) states that every assessee shall on demand make available records, trial balance, income tax audit report to the audit party and audit will be conducted by the qualified Chartered Accountant/Cost Accountant as deputed by the Deputy Commissioner.
In view of this, it was held that, Rule 5A of STR 1994 is not ultra vires and it is in consonance to section 72A of the Finance Act and accordingly the High Court dismissed the Writ Petitions.
