Sumit Grover
Less than a week ago, CBEC had empowered CAs & CMAs(nominated u/s 72A) to conduct service tax audits on behalf of service tax department, by setting aside the verdict pronounced by Hon'ble Delhi High Court in case of CAG Travelite (India) Vs. Union of India & Ors., wherein the court took the view that the service tax audits are not backed by any statutory provisions, therefore rule 5A(2) of Service Tax Rules, 1994 is bad in law.
And and amendment was introduced vide N/N 23/2014- ST, and rule 5A(2) was amended, the pronouncement of Hon'ble Delhi High Court was overlooked and CAs/CMAs were made authorized to conduct service tax audits.
Now, subsequently, clarification has been issued by CBEC vide Circualr no. 181/7/2014- ST dated 10th dec'14, by drawing attention towards clause (k) to section 94(2),inserted vide which used the expression- the manner in which records shall be verfiied".
Department clarified that the words verification includes the audits as well.
Henceforth, the audits are now fullly backed by statutory provisions.
The said circular may be accessed from the folllowing link:
http://www.servicetax.gov.in/circular/st-circular14/st-circ-181-2014.htm
Comment:
It's the never ending practise of the department to nullify the judicial pronouncements by amending the provisions. One thing is appreciable that they didn't bring the amendment retrospectively.
One interesting point needs to be taken into consideration is that since the amended provision(referred in the circular) are applicable from 6th Aug'14, should be interprated that all the audits intiated prior to the said date, should be declared as void? The department needs to be very cautious before bringing such amendments which might prove negative for them.
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