Case Law Details
Vianaar Homes Private Limited Vs Assistant Commissioner CGST (Delhi High Court)
Conclusion: Authorities had power under Section 174(2)(e) of the CGST Act, 2017 to institute any investigation, inquiry, verification, assessment proceedings, adjudication, etc. under Rule 5A of the Service Tax Rules.
Held: Assessee-company was engaged in the business of construction of residential complexes since its incorporation. Assessee claimed to be a regular and timely taxpayer under both the Service Tax and GST regime. Officers of Central Goods and Service Tax, Audit-II visited the business premises of assessee, directed the production of certain documents and sought information in relation to the disputed period. In addition thereto, the officers also demanded information pertaining to several group companies of assessee. Despite assessee’s compliance with the above and submission of the requisite information, the officers visited the business premises again on 17.02.2020 as well as 24.02.2020. Their conduct exhibited the intention to continue with the visits, conduct audit/verification proceedings, and give further directions for production of documents and information. Aggrieved with the aforesaid action, assessee had challenged, inter-alia the letter by virtue whereof the authorities had commenced the audit/verification, on the ground that the same was void ab initio, being wholly without jurisdiction as well as without any statutory or legal authority. The primary hypothesis for assailing the action of the authorities was founded on the premise that w.e.f. 01.07.2017, by the advent of the CGST Act, the authorities could not take recourse to a subordinate legislation (i.e. Rule 5A Service Tax Rules, 1994) framed under Chapter V on the Finance Act, 1994, which, by virtue of Section 173 of CGST Act, stood omitted. The duty, tax etc. that was within contemplation of the saving clause was only that which falls within the ambit of section 72 & 73 of the Finance Act, 1994. The material question raised was whether the audit/verification contemplated under Rule 5A was saved despite the repeal of Chapter V. The court took into consideration the decision of the Apex Court in the case of State of Punjab v. Harnek Singh wherein it was held that while interpreting the words “anything duly done or suffered thereunder” used in clause (b) of Section 6 of GCA which were also found in Section 174(2)(b) of the CGST Act, had observed that these words used by the legislature in a saving clause were intended to provide, unless a different intention appeared, that the repeal of an Act would not affect anything duly done or suffered thereunder. Thus, the court having regard to 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, held that Rule 5A of Service Tax Rules, 1944 framed under the repealed or omitted chapter V of the Finance Act, 1994, was saved. In the instant case, the repeal of the old Act and re-enactment of the new Act was simultaneous. However it did not mean that all investigations, enquiries, audits, assessment proceedings, adjudications and other legal proceedings which form the subject matter of the Service Tax Rules stood abrogated the moment the new law was enacted, or that the officers carrying out the above exercise were stripped of their power to continue with the same because the Service Tax Rules were purportedly not saved. The audit/verification was a process prior to adjudication. If audit/verification would lead to any tax not paid or short paid, the adjudicatory process would necessarily follow. It could therefore not be construed that the service tax should become due only consequent to the exercise of powers under sections 72 and 73 of the Finance Act, 1994. Assessee might be right to the extent of saying that the audit under Rule 5A was qualitatively and materially different from an audit under section 72A of the Finance Act, 1994. Having regard to 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, it was held that Rule 5A of Service Tax Rules, 1944 framed under the repealed/omitted chapter V of the Finance Act, 1994, was saved.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. By way of the present petition, a challenge is laid to 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 Central Goods and Services Tax Act, 2017 [hereinafter referred to as the “CGST 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) or for the period since last audited [hereinafter referred to as “the disputed period”].
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