TMI Blog2014 (1) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing audit by the departmental officers of petitioner's records without assigning any reason thereof, by declaring it as illegal and without authority of law. C. A writ, order or direction in the nature of Mandamus directing opposite parties for regulating audit of service tax of assessee to make specific provision under Finance Act, 1994, and to prescribe norms for eligible category for selection of assessee for the purpose of audit, prescribe minimum qualification for the officers conducting audit for which audit is to be conducted, Format of Audit Report indicating circumstances under which such audit is to be conducted. D. Any other suitable writ, order or direction as the Hon'ble Court may deem fit and proper in the circumstances of the case. E. To award costs of the writ petition in favour of the petitioners." Thus, the petitioners-assessees prayed for declaring the Sub Rule (2) of Rule 5-A of the Service Tax Rules, 1994, as inserted by Notification No.45/2007-ST to be ultra vires. Second prayer is regarding quashing of the impugned intimation, whereby certain documents were required for conducting Central Excise Service Tax Audit under EA-2000. Sri Jai Kumar Mitta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable information as mentioned in Sub Rule (2) of Rule 5-A by audit party and as such the said Rule so framed is without any authority. Thus, it is ultra vires. The impugned Rule is totally arbitrary and without specifying the period for conducting the special audit. Qualification and manners in which audit will be conducted has not been defined anywhere. There is no provision to provide the audit report to the petitioner-assessee. Audit Manual, 2011 is exclusively meant for the departmental use. But, petitioners-assessees was asked to fill up certain forms. Further, learned counsel for the petitioners-assessees relied on the ratio laid down in the following cases :- (a) Union of India Ors. vs. S. Srinivasan, (2012) 7 SCC 683. In Para-21, it was observed that : "21. At this stage, it is apposite to state about the rule-making powers of a delegating authority. If a rule goes beyond the rule-making power conferred by the statute, the same has to be declared ultra vires. If a rule supplants any provision for which power has not been conferred, it becomes ultra vires. The basic test is to determine and consider the source of power which is relatable to the rule. Similarly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, void." Learned counsel also informs to the Hon'ble Court that the Hon'ble Delhi High Court in Writ Petition No. 3774 of 2013 has granted interim order to maintain the status-quo in the identical case. Learned counsel submits that whether the order is interim or final, it will have the effect throughout the territory of India. The petitioners-assessees also referred the judgment dated 26.09.2012 of the Calcutta High Court in Writ Petition No. 21053 (W) of 2011 on the similar issue, wherein it was held that CAG has no power to conduct service tax audit of private enterprises, which is not funded by Government. Lastly, he made a request that the impugned Rule may kindly be declared as ultra vires to the statute and he also made a request to set aside the impugned notice. On the other hand, Sri K.C. Kaushik, learned Additional Solicitor General of India; Sri Alok Mathur, Advocate and Sri A.K. Chaturvedi, Advocate, for the Union of India as well as Sri Rajesh Singh Chauhan, learned counsel for the opposite parties No. 2 to 4 has argued the case. Sri K.C. Kaushik, learned Additional Solicitor General of India, at the strength of written note, submits that the Rule is not incon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete picture of his accounts from the registered premises falling under the jurisdiction of the said Commissioner, he may direct such person to get his accounts audited by a chartered accountant or cost accountant nominated by him, to the extent and for the period as may be specified by the Commissioner. (2) The chartered accountant or cost accountant referred to in sub-section (1) shall, within the period specified by the said Commissioner, submit a report duly signed and certified by him to the said Commissioner mentioning therein such other particulars as may be specified by him. (3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of such person have been audited under any other law for the time being in force. (4) 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. Explanation.--For the purposes of this section,- (i) "chartered accountant" shall have the meaning assigned to it in clause (b) of sub-section (1) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 5-A, sub-rule (2) states that every assessee shall, on demand, make available to the officer authorised or the audit party, records, trial balance and income-tax audit report, if any. So here, the officer will demand the documents just to facilitate the correctness of books of accounts and ultimately, the audit will be conducted by the Audit Party headed by the Chartered Accountant/Cost Accountant, as the case may be, deputed by the Commissioner. 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. From the above, it is crystal clear that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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