A smart Alec move by certain field offices of Central Excise and Customs Department to recover service tax from none other than the Comptroller and Auditor General(CAG) of India has been nipped in the bud.

Some offices of this department which also covers service tax, had initiated steps towards charging the levy from CAG-a constitutional authority- for auditing the accounts of certain government organizations for which it charged a fee. An alarmed Central Board of Central Excise and Customs (CBEC) that governs the department soon came up with a notification clarifying that CAG could not be taxed. Lately CAG is in limelight for bringing to fore massive scams like coal block and 2G allocations.

CAG, which conducts audits in government departments across the board, also does it for certain state government corporations. It charges a fee from the latter. These are road service corporations and local bodies where audit is conducted under a legal mandate. At times, there is no other agency to audit the accounts in such body. The fee is basically salary payable to the audit team deployed in the organization for the period, the Accountant General for Maharashtra J S Kharpe told newspersons here. He stressed that, the audit fee was not the means to sustain CAG operations.

The CAG's department in Nagpur pleaded ignorance about field offices in other centres carrying out a similar exercise. Senior officials including the chief commissioner of customs and central excise were not available for comment. However, sources in the field of taxation practice say it was one of the audit objections raised on the department's operations that kicked off the move. Some officials thought of taxing a constitutional authority in retaliation. CAG officials, however, deny knowledged of any such link.

The offices which were gearing up to recover service tax from CAG also included one in Nagpur. However, within a fortnight, CBEC scuttled the move. The clarification says CAG cannot be included in the definition of a practising chartered accountant so as to cover the audit conducted by this agency into a taxable service. "CAG being a constitutional authority by no stretch of imagination can be considered as a concern similar to a chartered accountancy firm," reads the clarification issued on June 19.