Marwadi Shares and Finance Ltd. Vs Union of India Ors. (Supreme Court of India)
Service Tax: CERA audit under Rule 5A stayed -Supreme Court restores interim protection and restrains finalisation of audit
The petitioner is a registered stock broker. It received a notice for audit to be conducted by CERA. Such notice was challenged before the Hon’ble Gujarat High Court on the ground, inter alia, there is no jurisdiction to conduct audit in terms of Rule 5A of the Service Tax Rules as the same is ultra vires the provisions of the Finance Act as held by the Delhi High Court. The petiton was admitted and the audit proceedings were stayed. However, subsequently, the High Court, at the request of the Revenue, directed that the Revenue can conduct the audit but not finalise the audit report as the Supreme Court has stayed the decision of the Delhi High Court. This order was challenged in SLP before the Hon’ble Supreme Court.
The Hon’ble Supreme Court allowed the petition restoring the earlier interim order passed by the Gujarat High Court. It notes that the earlier order has been in operation since 2019; and no cause for variation of the stay order arose. It directed the High Court to decide the writ petiton on merits as expeditiously as possible.
