In view of the judgment of Allahabad High Court and Delhi High Court, CBEC has amended the controversial rule 5A of the Service Tax Rules 1994. Earlier, Allahabad High Court had ruled that only chartered accountants or cost auditors can conduct service tax special audit under section 72A. Also Delhi High Court had declared that the Rule 5A(2) related to Service Tax Audit is ultra-vires. Now the Notification 28/2014 has substituted the said rule providing for Service Tax Audits by party deputed by Commissioner. Further the Circular 181/7/2014 dated 10-12-2014 clarifies that such parties essentially include departmental officers.
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
GOVERNMENT OF INDIA
NOTIFICATION No. 23/2014-SERVICE TAX
New Delhi, the 5
G.S.R. (E). In exercise of the powers conferred by clause (k) of sub-section (2), read with sub-section (1) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:-
1. (1) These rules may be called the Service Tax (Third Amendment) Rules, 2014.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Service Tax Rules, 1994, in rule 5A, for sub-rule (2), the following sub-rule shall be substituted, namely:-
“(2) Every assessee, shall, on demand make available to the officer empowered under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, or a cost accountant or chartered accountant nominated under section 72A of the Finance Act, 1994,-
(i) the records maintained or prepared by him in terms of sub-rule (2) of rule 5;
(ii) the cost audit reports, if any, under section 148 of the Companies Act, 2013 (18 of 2013); and
(iii) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 (43 of 1961),
for the scrutiny of the officer or the audit party, or the cost accountant or chartered accountant, within the time limit specified by the said officer or the audit party or the cost accountant or chartered accountant, as the case may be.”
Note:- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 2/94-SERVICE TAX, dated the 28th June, 1994 vide number G.S.R. 546 (E), dated the 28th June, 1994 and last amended vide notification No.19/2014-SERVICE TAX, dated the 25 th August, 2014 vide number G.S.R. 614 (E), dated the 25 th August, 2014.
Only Chartered Accountants or Cost Accountants can perform Service Tax Special Audit-Allahabad HC Click Here >>
Rule 5A(2) related to Service Tax Audit is ultra-vires-Delhi High Court Click Here >>
CBEC Circular 181/7/2014 dated 10/12/2014 Clarifying audit by Departmental Officers Click Here >>