Rule 5A of the Service Tax Rules, 1994 provides for audit under service tax. This provision empowers Commissioner to appoint officer for carrying out audit under Service Tax. As everyone are aware, the recent buzz is that appointment of Departmental Officer for audit under this rule is invalid as it is ultra vires Section 72A which contemplates only special audit by a Chartered Accountant or Cost Accountant. Let’s have a look at this rule before proceeding to discuss on this issue.
“5A. Access to a registered premises:
- An officer authorised by the Commissioner in this behalf shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue.
- Every assessee shall, on demand, make available to the officer authorised under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party, as the case may be,-
- the records as mentioned in sub-rule (2) of rule 5;
- trial balance or its equivalent; and
- 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 audit party, as the case may be.”
On perusal of this rule, the following interpretations emanate—
- Sub-rule(1) empowers Commissioner to authorize an officer for accessing any registered premises to carry out any scrutiny, verification, checks as may be necessary to safeguard the interest of revenue.
- Sub-rule(2) requires the assessee to produce records on demand within reasonable time to the officer authorized under sub-rule(1), the audit party deputed by Commissioner, or the C&AG.
