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2014 (1) TMI 1562 - HC - Service TaxService Tax Audit under EA-2000 - power to conduct audit - The petitioners-assessees objected and also challenged the vires of Rule 5A(2) of the Service Tax Rules, 1994 interalia on the ground that the provision of Rule 5(A)(2) are contrary to the provision of Section 72 of the Service Tax Act - Held that:- section 72A is applicable, where the assessee is not maintaining the books of account properly to ascertain the liability of the service tax. To determine the correct tax, books will have to be examined and if need be, audited by a qualified Chartered Accountant - accounts will be audited by a Chartered Accountant or a Cost Accountant to be appointed by the Commissioner. In Clause-(2) to Section 72-A of above, it is mentioned that the Chartered Accountant or Cost Accountant will submit a report duly signed and certified by him to the said Commissioner. In Clause-(4), it is mentioned that "the person liable to pay tax shall be given an opportunity of being heard in respect of any material gathered on the basis of the audit under sub-section (1) and proposed to be utilized in any proceeding under the provisions of this Chapter or rules made thereunder". Copy of the audit report may be made available to the assessee and a proper opportunity will also provided to him, as per law. It is Commissioner on whose behalf, the officer will collect the material and the Auditor will perform the audit. In any case, the final report duly signed by the Chartered Accountant will be submitted to the Commissioner. In case of Government Autonomous Body, the function of the audit has been assigned to the Comptroller of Auditor General of India - in case of private assessee, the Commissioner will refer the matter to an officer to collect the material or Chartered Accountant for the purpose of audit. Thus, for the purpose of audit, the material can be collected either by the officer authorized by the Commissioner or by the Auditor himself. But, audit will be performed only by the Chartered Accountant - Thus there is no inconsistency in Rule 5A and Section 72-A of the Finance Act, 1994. The said provision is not arbitrary. The manner for conducting the audit is as per the accounting standard provided by the Institute of Chartered Accountant of India. The audit report will be made available to the assessee, as per law - Decided against Appellant.
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