• Gallery
  • Browse by Category
  • Videos
  • Top Rated Articles
  • Public TimeLine
  • News RSS Feeds
  • Chief Editor : Manilal B. Par |  Executive Editor : Bipul A. Singh
  • MEGA CABS DECISION - STAYED - AS EXPECTED !!: ABHAY DESAI
    MEGA CABS DECISION - STAYED - AS EXPECTED !!: ABHAY DESAI editor editor on Saturday, October 1, 2016 reviews [0]
    MEGA CABS DECISION - STAYED - AS EXPECTED !!: ABHAY DESAI
    Dear Readers,
    As expected, Hon. Supreme Court has stayed the operation of the decision rendered by Hon. Delhi High Court ("DHC") in the case of Mega Cabs Pvt. Ltd. (Writ Petition(C) No.5192 of 2015). DHC had held that even amended Rule 5A which allows department to seek certain documents for the purpose of "scrutiny" is ultra vires the provisions of Finance Act, 1994 as the Act did not provide for calling such documents and also did not permit such general verification. Please refer our earlier communication dated 20.09.2016 in the context of third party verification wherein we have stated that the referred decision shall in all probability be stayed by the Apex Court as the said Court in the Travelite case (wherein even Rule 5A did not contain the word "scrutiny") has also granted stay. This shall now enable department to carry out the audits. However following points must be noted:

    1) Stay on the referred decision shall still not permit department to carry out audits in the guise of "third party verification".
    2) Procedure of authorising proper officer by the Commissioner to carry out the "scrutiny" is must.
    3) Only stay has been granted, judgment has not been reversed both in Travelite as well as Mega Cabs. No one knows about the final decision but we advise that an objection on record must be given as that may help especially in the period before the amendment to Rule 5A i.e. 05.12.2014. Although it is only a technical defence, it must be duly recorded as a famous lawyer had once said that you never know what can appeal to the judge.

    Please find below the text of the order.

    Thanks & Regards,
    Abhay Desai

    [2016] 73 taxmann.com 402 (SC)
    SUPREME COURT OF INDIA
    Union of India
    v.
    Mega Cabs (P.) Ltd.
    MADAN B. LOKUR AND DR. D. Y. CHANDRACHUD, JJ.
    PETITION(S) FOR SPECIAL LEAVE TO
    APPEAL (C) NO(S). 26675 OF 2016
    SEPTEMBER 26, 2016
    Rule 5A , read with rule 5 of the Service Tax Rules, 1994 and sections 72, 72A, 73, 82 and 94(2)(k) of the Finance Act, 1994 - Audit - Service Tax - Submission of Records - Rule 5A(2) was amended w.e.f. 5-12-2014 authorising officers of Service Tax Department or audit party to seek production of documents on demand and Circulars 181/7/2014-ST and Circular 995/2/2015-CX were issued power of audit and audit norms - Assessee challenged said rule and Circulars on ground that there is no power of audit with service tax authorities and only audit under Section 72A can be conducted by Chartered/Cost Accountants - High Court held that : (A) there is no general power with service tax authorities to conduct audit; (B) word 'verify' in section 94(2)(k) empowers verification of records and does not empower 'audit' of records, as audit is an specialized function and cannot be entrusted to any and every officer of department; (C) moreover, 'records' would mean 'records' required to be kept under rule 5(2), therefore, rule 5A(2) requiring even furnishing of 'audit reports' exceeds mandate of 'records'; and (D) hence, Rule 5A(2) and two Circulars were ultra vires and quashed - On Revenue's Special Leave Petition before Supreme Court - HELD : Notice be issued in petition - In meanwhile, there shall be a stay of operation of judgment of High Court. [Para 3] [Partly in favour of Revenue]
    Circulars and Notifications : Notification No. 23/2014-ST, dated 5-12-2014, Circular No. 181/7/2014-ST dated 10-12-2014, Circular No. 995/2/2015-CX dated 27th February 2015
    CASE REVIEW

    Mega Cabs (P.) Ltd. v. Union of India [2016] 70 taxmann.com 51 (Delhi) - stayed.

    Mukul Rohatgi, AG, Rupesh Kumar, Subash C. Acharya, Ms. Diksha Rai, Nikhil Rohatgi, Mohit Khubchandani, Advs. and B. Krishna Prasad, AOR for the Petitioner. J.K. Mittal, Rajveer Singh, Advs. and Praveen Swarup, AOR for the Respondent.
    ORDER

    Issue notice.
    Mr. J.K. Mittal, learned counsel accepts notice on behalf of the sole respondent.
    In the meanwhile, there shall be a stay of the operation of the impugned judgment and order dated 3.6.2016 passed by the High Court in Writ Petition(C) No.5192 of 2015.
    Tag with Special Leave Petition (Civil) No.34872 of 2014
                               

      Comments
    » Not yet reviewed by any member. You can be the first one to write a review.
    
    » You must be logged in to post a comment