This Court has rejected the argument that Rule 5A of the Service Tax Rules does not survive the enactment of CGST Act, 2017. Therefore, audit under service tax is allowed after implementation of GST
Section 174 of the CGST Act, 2017, Rule 5A of the Service Tax Rules — Audit of Service Tax Records -- The petitioner challenged the jurisdiction, authority and legality of the action of the Respondents initiated in terms of Rule 5A of the Service Tax Rules, 1994, read with Section 174(2)(e) of the GST Act, for conducting audit/verification of documents and records at the business premises of the Petitioner for the period of F.Y. 2014-15 to 2016-17 (up to June 2017). The Petitioner submitted that officers of CGST directed for production of certain documents and sought information. The Petitioner challenged letter dated 01.11.2019 by which the Respondents have commenced the audit/verification. The petitioner submitted that the Respondents cannot take recourse to a subordinate legislation (i.e. Rule 5A Service Tax Rules, 1994) which, by virtue of Section 173 stands omitted. The repeal and saving provision Section 174 does not specifically save Rule 5A of the Service Tax Rules, 1994. The respondent relied the judgment by this Court in the case of Aargus Global Logistics Pvt. Ltd. v. Union of India and Anr., and submitted that the legal ground challenging the action of the Respondent does not survive.
Held that:-The Hon’ble High Court held that the investigation, inquiry, verification (including scrutiny and audit) falls within the ambit of Section 174(2) of the Act and the language used in the saving clause of the CGST Act as well as Sections 6 and 24 of the General Clauses Act, along with the legislative intent behind the repeal and enactment, Rule 5A of Service Tax Rules, 1944 framed under the repealed/omitted chapter V of the Finance Act, 1994, is saved.
This Court has rejected the argument that Rule 5A of the Service Tax Rules does not survive the enactment of CGST Act, 2017. Therefore, audit under service tax is allowed after implementation of GST
Section 174 of the CGST Act, 2017, Rule 5A of the Service Tax Rules — Audit of Service Tax Records -- The petitioner challenged the jurisdiction, authority and legality of the action of the Respondents initiated in terms of Rule 5A of the Service Tax Rules, 1994, read with Section 174(2)(e) of the GST Act, for conducting audit/verification of documents and records at the business premises of the Petitioner for the period of F.Y. 2014-15 to 2016-17 (up to June 2017). The Petitioner submitted that officers of CGST directed for production of certain documents and sought information. The Petitioner challenged letter dated 01.11.2019 by which the Respondents have commenced the audit/verification. The petitioner submitted that the Respondents cannot take recourse to a subordinate legislation (i.e. Rule 5A Service Tax Rules, 1994) which, by virtue of Section 173 stands omitted. The repeal and saving provision Section 174 does not specifically save Rule 5A of the Service Tax Rules, 1994. The respondent relied the judgment by this Court in the case of Aargus Global Logistics Pvt. Ltd. v. Union of India and Anr., and submitted that the legal ground challenging the action of the Respondent does not survive.
Held that:-The Hon’ble High Court held that the investigation, inquiry, verification (including scrutiny and audit) falls within the ambit of Section 174(2) of the Act and the language used in the saving clause of the CGST Act as well as Sections 6 and 24 of the General Clauses Act, along with the legislative intent behind the repeal and enactment, Rule 5A of Service Tax Rules, 1944 framed under the repealed/omitted chapter V of the Finance Act, 1994, is saved.