{"id":31,"date":"2014-09-01T08:59:10","date_gmt":"2014-09-01T08:59:10","guid":{"rendered":"http:\/\/carajput.com\/blog\/?p=31"},"modified":"2022-02-15T21:15:26","modified_gmt":"2022-02-15T15:45:26","slug":"contentions-of-the-department","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/contentions-of-the-department\/","title":{"rendered":"No audit of private assessee can be undertaken by CAG"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d70fa3a2b52\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d70fa3a2b52\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/contentions-of-the-department\/#No_audit_of_private_assessee_can_be_undertaken_by_CAG\" title=\"No audit of private assessee can be undertaken by CAG.\">No audit of private assessee can be undertaken by CAG.<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/contentions-of-the-department\/#Held\" title=\"Held\">Held<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/contentions-of-the-department\/#Rule_5A2_of_the_Service_tax_Rules_is_ultra_vires_the_provisions_of_the_Finance_Act\" title=\"Rule 5A(2) of the Service tax Rules is ultra vires the provisions of the Finance Act:\">Rule 5A(2) of the Service tax Rules is ultra vires the provisions of the Finance Act:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/contentions-of-the-department\/#Conclusion_to_Note\" title=\"Conclusion to Note:\">Conclusion to Note:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/contentions-of-the-department\/#CAG_Empanelment_Update_on_%E2%80%93_2022-23\" title=\"CAG Empanelment Update on &#8211; 2022-23\">CAG Empanelment Update on &#8211; 2022-23<\/a><\/li><\/ul><\/nav><\/div>\n<p><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/11\/Untitled22-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-1729\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/11\/Untitled22-1.png\" alt=\"www.carajput.com;Service Tax Update\" width=\"948\" height=\"341\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/11\/Untitled22-1.png 776w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/11\/Untitled22-1-300x108.png 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/11\/Untitled22-1-768x276.png 768w\" sizes=\"(max-width: 948px) 100vw, 948px\" \/><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_audit_of_private_assessee_can_be_undertaken_by_CAG\"><\/span><span style=\"color: #000080;\"><strong>No audit of private assessee can be undertaken by CAG.<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: justify;\">The Revenue argued that Rule 5A of the <a href=\"https:\/\/carajput.com\/Service-Tax-Procedure.aspx\">Service Tax Rules<\/a>\u00a0was made pursuant to the power conferred under Section 94 of the Finance Act and not pursuant to Section 72A of the Finance Act. Further, the Revenue also contended that the Rule is also justified by invoking the provisions of Service Tax Audit Manual as the basis for ordering an audit.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Held\"><\/span><span style=\"color: #ff0000;\"><strong>Held<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Rule_5A2_of_the_Service_tax_Rules_is_ultra_vires_the_provisions_of_the_Finance_Act\"><\/span><span style=\"color: #000080;\"><strong>Rule 5A(2) of the Service tax Rules is ultra vires the provisions of the Finance Act:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<ul>\n<li style=\"text-align: justify;\">The Hon\u2019ble Delhi High Court held that Rules only give effect to statute\u2019s provisions and intent and cannot be used to create substantive rights, obligations or liabilities that are not within the contemplation of the statute. Further, the only audit within the Statute is as mentioned U\/s 72A of the Finance Act, i.e. a Special Audit, when only certain circumstances are fulfilled.<\/li>\n<li style=\"text-align: justify;\">Parliament thus had a clear intention to provide for only a special audit. Accordingly, Rule 5A(2) of the Service Tax Rules cannot provide for a general audit of the assessee and is ultra vires the rule making power conferred under Section 94(1) of the Finance Act.<\/li>\n<li style=\"text-align: justify;\">Further, the Hon\u2019ble Delhi High Court also held that the Service <a href=\"https:\/\/carajput.com\/tax-audit.php\">Tax Audit<\/a> Manual is merely an instrument of instructions for the service tax authorities and do not have any statutory force. Therefore, Rule 5A(2) of the Service Tax Rules cannot be justified on the basis of the Service Tax Audit Manual.<\/li>\n<li style=\"text-align: justify;\">The Instruction regarding <a href=\"https:\/\/www.caindelhiindia.com\/blog\/challenges-faced-by-local-ca-firms-in-india\/\">Audit by Department<\/a> is contrary to the Statue: Further, it was held that the Instruction is also ultra vires the Finance Act since executive instructions without statutory force cannot override the law.<\/li>\n<li style=\"text-align: justify;\">Consequently, any notice, circular, guideline etc., contrary to statutory laws cannot be enforced since the parent statute in this regard, the Finance Act itself does not authorise a general audit of the type envisioned by the impugned Rule 5A(2) of the <a href=\"https:\/\/carajput.com\/services-tax-registration.php\">Service Tax Rules<\/a>, and furthermore only stipulates that a Special Audit can be undertaken if the circumstances outlined in Section 72A of the Finance Act are fulfilled.<\/li>\n<\/ul>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Conclusion_to_Note\"><\/span><span style=\"color: #000080;\"><strong>Conclusion to Note:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The Hon\u2019ble High Delhi Court finds that the Instruction is not only an attempt to widen the scope of the law impermissibly but also is patently contrary to the Statute. The Instruction, to the extent it provides clarifications on Rule 5A(2) of the Service Tax Rules, pertaining to Service Tax audit, is quashed.<\/li>\n<\/ul>\n<ul>\n<li style=\"text-align: justify;\">It will not be out of place to mention that recently, the Hon\u2019ble Allahabad High Court in thecase of\u00a0ACL Education Centre Pvt. Ltd. &amp; Ors. Vs. Union of India [2014-TIOL-120-HC-ALL-ST]\u00a0has held that the Audit under service tax is to be conducted by Chartered Accountants\/ Cost Accountants only and not by officers of the Department.<\/li>\n<li style=\"text-align: justify;\">Further the Hon\u2019ble Calcutta High Court in the case of\u00a0SKP Securities Ltd. Vs. DD (RA-IDT) &amp; Ors. [2013-TIOL-38-HC-KOL-ST]\u00a0has held that no audit of private assessee can be undertaken by CAG.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"CAG_Empanelment_Update_on_%E2%80%93_2022-23\"><\/span><span style=\"color: #000080;\"><strong>CAG Empanelment Update on &#8211; 2022-23<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>The CAG Empanelment process for FY 2022-23 has started.<\/li>\n<li>Last Date for online submission is 15th February, 2022<\/li>\n<li>The firms\/LLPs will be required to submit a print out of the acknowledgement letter generated online and also hard copies of the documents in support of their online application to the CAG Office by 28th February, 2022<\/li>\n<\/ul>\n<p>Know more about information:\u00a0<a href=\"https:\/\/carajput.com\/being-consultant.aspx\">\u00a0international tax consultant\u00a0<\/a>and\u00a0<a href=\"https:\/\/carajput.com\/services-virtual-office.aspx\">virtual office providers <span style=\"text-decoration: underline;\">.\u00a0<\/span> <\/a>Call at 011-435 201 94 or mail at singh@carajput.com to get detailed services in India.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>No audit of private assessee can be undertaken by CAG. The Revenue argued that Rule 5A of the Service Tax Rules\u00a0was made pursuant to the power conferred under Section 94 of the Finance Act and not pursuant to Section 72A of the Finance Act. Further, the Revenue also contended that the Rule is also justified &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[2557,2561,2558,2559,2556,2560],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=31"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31\/revisions"}],"predecessor-version":[{"id":7023,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31\/revisions\/7023"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=31"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=31"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=31"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}