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2016 (6) TMI 163 - HC - Service TaxPower to Audit under Service Tax - Scope of Rule 5A(2) of service tax Rules, 1994 r.w.s. 94(1) and 94(2)(k) - Power to demand documents - challenged to the constitutional validity of Section 94(2)(k) of the FA on the ground that it gives "plainly unguided and uncontrolled” delegated powers to the Central Government for framing rules. It is stated that Section 94(2)(k) of the FA suffers from the vice of excessive delegation. Held that:- Rule 5A(2) as amended in terms of Notification No. 23/2014-Service Tax dated 5th December 2014 of the Central Government, to the extent that it authorises the officers of the Service Tax Department, the audit party deputed by a Commissioner or the CAG to seek production of the documents mentioned therein on demand is ultra vires the FA is Unconstitutional and, therefore, strikes it down to that extent. The expression 'verify' in Section 94 (2) (k) of the FA cannot be construed as audit of the accounts of an Assessee and, therefore, Rule 5A(2) cannot be sustained with reference to Section 94(2)(k) of the FA. Circular No. 181/7/2014-ST dated 10th December 2014 of the Central Government declared as ultra vires the FA and strikes it down as such. Letter issued by the Commissioner of Service Tax, Audit-1, New Delhi addressed to the Petitioner declared as being unsustainable in law. CBEC Circular No. 995/2/2015-CX dated 27th February 2015 on the subject "Central Excise and Service Tax Audit norms to be followed by the Audit Commissionerates” and the Central Excise and Service Tax Audit Manual 2015 issued by the Directorate General of Audit of the CBEC declared as ultra vires the FA, do not have any statutory backing and cannot be relied upon by the Respondents to legally justify the audit undertaken by officers of the Service Tax Department.
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