Skip to main content

No Service tax Audit by Department

In the Delhi High Court Mega Cabs Pvt. Ltd. filed writ petition (C) No. 5192/2015 [[Mega Cab v UOI and Anr.] challenging the validity of Rule 5A(2) of the Service Tax Rules as substituted by Notification No. 23/2014-ST, dated 05.12.2014, clause (k) of sub-section (2) of section 94 of the Finance Act, 1994 as inserted w.e.f. 06.08.2014 by the Finance Act, 2014 and also the Circular No. 181/7/2014-ST dated 10.12.2014 directing departmental officers to conduct audit of the service tax assessees as provided in the departmental instructions. In the matter, Delhi High Court has entertain the said writ petition and by order dated 22.05.2015 please to issue Notice to the Union of India, Ministry of Finance, and also to the Service Tax (Audit) Department, Delhi. 
Yesterday, (03.06.2016), the Delhi High Court delivered a landmark Judgment [Mega Cab v UOI and Anr. in WP(C) 5192/2015] - no more audit of assessee records by the Central Excise and Service Tax Department and strike down Rule 5A(2) of Service Tax Rules as ultra vires to the Finance Act, 1994.
The Court also held that "verification" in clause (k) of sub-section (2) of section 94 of the Finance Act, 1994 cannot be constructed as  "audit" which is specialized function otherwise clause (k) suffered from the vice of excessive delegation of legislative power by the Parliament.
The Court also strike down the Circular No. 181/7/2014-ST (F. No. 137/46/2014-ST), dated 10-12-2014 regarding Audit of the Service Tax assessees by the officers of Service Tax and Central Excise Commissionerates as well as circular dated Circular No. 995/2/2015-CX (F. No. 206/03/2014-CX.6),dated 27-2-2015 regarding Central Excise and Service Tax Audit norms to be followed by the Audit Commissionerates.
The High Court further held that Audit Manual – 2015 issued by the Department also has no statutory force by observing that earlier Audit Manual 2011 was also declared without any statutory backing Travelite (India) v UOI 2014 (35) S.T.R. 653 (Del.). The Government has not down anything to remove the defect pointed out in Travelite (India) judgment.
The Court also quashed impugned letter C. No. I-26(494)ST/AMR-48B/Mega Cabs/C-IV/gr-1/2013/383 dated 30.04.2015 issued by service tax Department to Mega Cab regarding audit.
It is a general practice of Service Tax Department to conduct audit of service tax assessee for last five years by deputing their own officers of the rank of inspector and Superintendents. Service Tax Department also seeks voluminous details and seeks information in self-specified format/annexures of about 32 pages, which are not prescribed under the law. Service Tax Department without assigning any reasons and routinely conducts audit even when it is not prescribed under the law and not conducting special audit.
It may be noted that earlier Rule 5A(2) was struck down as ultra vires by  the Hon'ble Delhi High Court in the matter of Travelite (India) v UOI 2014 (35) S.T.R. 653 (Del.), after that amendment was made by the Finance Act, 2014 by inserting clause (k) of sub-section (2) of section 94 and on the basis of that sub-rule (2) to Rule 5A has been again enacted. Whereas in Circular No. 181/7/2014-ST dated 10.12.2014, stand has been taken by the Government that Travelite (India)  judgment can be distinguished as a clear statutory backing for the rule now exists in section 94(2)(k) of the said Act.
The High Court has given detailed judgment considering various judgments. Now this judgment made is clear that the officers of the Department has no power to conduct audit at all. Similarly, the CAG officers also have no power to conduct audit of the assesse records.

Comments

Popular posts from this blog

INSPECTION MANUAL OF STOCK, BOOK DEBTS & SECURITIES

CONTENTS SR. NO. CHAPTER PAGE NO. INTRODUCTION STOCK & RECEIVABLES AUDIT VERIFICATION OF STOCK & DEBTORS PROCEDURE OF STOCK AUDIT VERIFICATION OF SECURITIES ANALYTICAL REVIEW INTERNAL CONTROL QUESTIONNAIRE STOCK b) BOOK DEBTS LIST OF DOCUMENTS TAKEN AS WORKING PAPERS SPECIMEN INSPECTION REPORT SPECIMEN MANAGEMENT REPRESENTATION LETTER CHAPTER 1 INTRODUCTION: Banking is an important sector of the economy of any country and for the development of the economy a healthy banking system is a must. After the liberalization of the economy, the banking system has undergone a total change in India. There is hard competition in the banking industry to survive in the current circumstances. With the purpose to have better financial discipline & to ensure uniformity in accounting norms RBI introduced the concept of assetclassification & income recognition as per the recommendations of Narasimhan Committee. It was also suggested to classify the advances given by banks into Performing & Non Perfor…

Excel Add-in to convert amount in figures to words by Premal

Gentlemen:
AmtInWords.xla is attached to this mail. It is an MS Excel Add-in written by me to convert amount available in figures to words.
Installation
Copy the attached file to the folder where excel stores the add-ins. (To know where excel stores the add-ins, open any workbook, click on Tools - Add-ins - Browse)
Then open an excel workbook. Click on Tools - Add-ins - Browse - Give the path to this Addin - Ok
Usage
You can use the functions AmtInWords and AmtInWordsUS in any worksheet. The syntax is:
=AmtInWords(decimal number/cell reference, [currency code])
=AmtInWordsUS(decimal number/cell reference, [currency code])
Examples follow:
=AmtInWords(10000000)
=AmtInWords(123456.77)
=AmtInWords(C4)
=AmtInWordsUS(B3) ' Shall give the amount in millions (US format)
=AmtInWordsUS(B3,"USD") ' Shall give the amount in millions (US format) and in US currency (Dollars)
=AmtInWords(C4,"GBP") ' Shall give the amount in lakhs and in UK currency (Pounds)
Notes
The system shall N…

A Complete Guide to sections 54 & 54F Exemptions - T.V. GANESAN CS

A Complete Guide to sections 54 & 54F Exemptions T.V. GANESAN CS If an individual transfers any long-term capital asset and plans to reinvest the sale proceeds in a new residential house property then he would be eligible to claim exemption under sections 54 and 54F of the Income-tax Act, 1961 subject to fulfilment of certain conditions. In the last couple of years there has been a phenomenal increase in the sale of properties resulting in capital gain including but not limited to the land owners giving the land to the developers and entering into Joint Development Agreement, receiving more than one flat from the builder and yet avoiding capital gains tax. In this article the author has enumerated various decisions and judgments of the Tribunals and the High Courts which have liberally interpreted the provisions of the Income-tax Act and extended the capital gains exemptions to the assessees. Introduction 1. Out of the various investment options available, investment in real estate …