Allahabad High Court has on 19-12-2013, rejected the Writ Petition filed against the intimation issued by Central Excise Department under Rule 5A(2) demanding documents from the assessee for making a reference to conduct an Audit.
Earlier, the assessees had filed a writ petition and 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) as inserted by Notification No.45/2007-ST to be ultra vires.are contrary to the provision of Section 72 of the Service Tax Act.
The relevant excerpts of the judgement of the Hon'ble court's Judgement are as under:
Rule 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 pious duty of the assessee to make available the record as mentioned in Rule 5A i.e. trial balance or its equivalent; and the income-tax audit report, if any, under Section 142(2A) of the Income Tax Act, 1961, for the scrutiny of the officer or the Audit Party, as the case may be.
Regarding setting aside of the impugned intimation, it may be mentioned that through the impugned intimation, the Commissioner has asked its officer to collect the material from the assessee for the purpose of audit. The books of accounts/records of the assessee are required by the Chartered Accountant.
During the course of arguments, learned Additional Solicitor General of India has assured that the audit will be performed by a qualified Chartered Accountant and as per accounting standard. After the audit report, the assessee will get the copy of the report, as per law.
Download the copy of the Judgement Click Here >>
However, The CBEC has vide Notification 23/2014 dated 5-12-2014 amended Rule 5A2 to be in line with the judgment Read more Click Here >>