Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: empanelment :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: VAT RATES :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: list of goods taxed at 4% :: VAT Audit :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4%
 
 
News Headlines »
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government

Service Tax Dept can also conduct Service Tax Audit along with CA or CMA CBEC clarifies
December, 16th 2014

Service Tax Dept can also conduct Service Tax Audit along with CA or CMA – CBEC clarifies

 

The Hon’ble High Court of Delhi in the case of Travelite (India) Vs. Union of India and Ors. [2014 (8) TMI 200 - DELHI HIGH COURT] (“the Travelite case”) while holding Rule 5A(2)of the Service Tax Rules, 1994 (“the Service Tax Rules”as ultra vires the provisions of the Finance Act, 1994 (“the Finance Act”), clearly held that No Service Tax Audit can be conducted by the Department and only Special Audit within the Statute as mentioned underSection 72A of the Finance Act can be done either by a Chartered Accountant or Cost Accountant only in specified certain circumstances”. It was further held that Service Tax Audit as envisaged in Rule 5A(2) of the Service Tax Rules does not have appropriate statutory backing.

Even, the Hon’ble Allahabad High Court in the case of ACL Education Centre Pvt. Ltd. and Ors. Vs. Union of India [2014 (1) TMI 1562 - ALLAHABAD HIGH COURT] has held that the Audit under Service tax is to be conducted by Chartered Accountants/ Cost Accountants only and not by officers of the Department.

Further, the Hon’ble Calcutta High Court in the case of SKP Securities Ltd. Vs. DD (RA-IDT) and Ors. 2013 (1) TMI 549 - CALCUTTA HIGH COURT has also held that no Audit of private assessee can be undertaken by CAG under Rule 5A(2) of the Service Tax Rules.

Thereafter, in the background of the Travelite case, the Central Board of Excise and Customs (“CBEC” or “the Board”) vide Circular No. 986/10/2014-CX dated October 9, 2014 had clarified that judgment under the Travelite case does not deal with the issue of audit in the Central Excise. It was further clarified that there is adequate statutory backing for Audit by the Central Excise officers by virtue of Section 37(2)(x) of the Central Excise Act, 1944 and Rule 22of the Central Excise Rules, 2002 for conducting Central Excise Audit.

Recently, the Central Government vide Notification No. 23/2014-ST dated December 5, 2014 (“Notification No. 23”) had substituted Rule 5A(2) of the Service Tax Rules, thereby nominating a Chartered Accountant or a Cost Accountant along with an officer authorised by the Commissioner or the Audit Party deputed by the Commissioner or CAG to conduct Service Tax Audit. Further, the time limit of 15 days for making available the requisite documents by the Assessee was dispensed with.

Clarification by the CBEC:

The Board vide Circular No. 181/7/2014-ST dated December 10, 2014 (“the Circular”) has tried to remove the mist surrounding the power of the Departmental officers to conduct Service Tax Audit and had clarified that Rule 5A(2) of the Service Tax Rules, interalia, provides for scrutiny of records by an officer authorised by the Commissioner or the Audit Party deputed by the Commissioner or CAG and such scrutiny essentially constitutes Audit by the Audit Party consisting of the Departmental officers.

It has been further clarified that Rule 5A(2) of the Service Tax Rules has appropriate statutory backing for conducting Service Tax Audit by the Departmental officers by virtue of Section 94(2)(k) of the Finance Act as amended by Section 114(J) of the Finance Act, 2014 w.e.f. August 6, 2014 which reads as under:

"(k) Imposition, on persons liable to pay service tax, for the proper levy and collection of tax, of duty of furnishing information, keeping records and the manner in which such records shall be verified."

Furthermore, it has been clarified that the expression "verified" used in Section 94(2)(k) of theFinance Act is of wide import and would include within its scope, Audit by the Departmental officers, as the procedure prescribed for Audit is essentially a procedure for verification mandated in the Statute.

Therefore, the judgment of the Hon’ble High Court of Delhi in the Travelite case has now been refuted by the Board by way of amendment made under Rule 5A(2) of the Service Tax Rules by virtue of power derived under Section 94(2)(k) of the Finance Act, as the Service Tax Audit can be conducted by the Departmental officers as well.

But, following open questions are not answered in the Circular and requires attention of the Board for the clarification at the earliest:

  • Whether the amendment made in Rule 5A(2) of the Service Tax Rules vide Notification No. 23 are effective only w.e.f December 5, 2014 for the Departmental officers to conduct the Service Tax Audit?
  • What would be legal fate of Service Tax Audits initiated/ conducted prior to August 6, 2014, can it be declared as void in the light of the Travelite case?

Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.

Thanks and Best Regards.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Achievements

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions