2019 (1) TMI 917 - HC - Service Tax

Service tax audit - Jurisdiction post GST era - Sections 173 and 174 of the GST Act of 2017 - Held that - The provisions of Chapter V of the Finance Act, 1994 stands omitted by Section 173 of the Act of 2017 save as otherwise provided under the Act of 2017. Therefore, if any provision of the Act of 2017 allows the applicability of the Chapter V of the Finance Act, 1994, then notwithstanding the omission of the Chapter V of the Finance Act, 1994 under Section 173 the same continues to apply - Section 174 is the repeal and saving provisions. Sub-Section 1 of Section 174 repeals the provisions of the various statutes as mentioned therein. Sub-Section (2) of Section 174 stipulates that, notwithstanding the repeal of the Acts mentioned in Sub-Section (1) of Section 174 and the amendment of the Finance Act, 1994 to the extent mentioned in Sub-Section (1) of Section 174 or Section 173, it shall not affect any pending investigation, enquiry, verification or other legal proceedings and that, such proceedings may be instituted, continued or enforced as if such Act had not been repealed. Prima facie, reading Sections 173 and 174 of the Act of 2017 it appears that, an enquiry or an investigation or even a legal proceeding under the Act of 1994 is permissible notwithstanding the coming into effect of the Act of 2017. The authorities are proposing undertake an audit for the period when the Act of 1994 was applicable.

Summary

Issues:
Challenge to notice and reminders issued without jurisdiction for audit under Chapter V of the Finance Act, 1994 post its repeal by the Central Goods and Services Tax Act, 2017.

Analysis:
The petitioners challenge a notice and reminders issued for an audit under Chapter V of the Finance Act, 1994 after its repeal by the Central Goods and Services Tax Act, 2017. The petitioners argue that the authorities lack jurisdiction to conduct such an audit as the Act of 2017 omits Chapter V of the Finance Act, 1994. They cite relevant legal provisions and previous judgments to support their claim for stay. The respondents, however, argue that previous challenges under Rule 5A of the Service Tax Rules, 1994 were set aside and remanded for fresh consideration, urging the court not to grant interim relief based on these precedents.

The petitioners clarify that their challenge is not against Rule 5A of the Service Tax Rules, 1994 but against the lack of jurisdiction of the authorities to conduct an audit under the Service Tax Act, 1994 post the Act of 2017. They highlight that previous judgments related to Rule 5A challenges were remanded for fresh consideration, keeping all points open for decision. The interim orders cited by both parties are distinguished based on the specific challenges raised in those cases.

The court delves into the provisions of Sections 173 and 174 of the Act of 2017, which deal with the amendment and repeal of previous acts. Section 173 omits Chapter V of the Finance Act, 1994, unless otherwise provided in the Act of 2017. Section 174 repeals various statutes but saves pending investigations, enquiries, and legal proceedings, allowing them to continue as if the previous acts had not been repealed. The court finds that these sections permit enquiries, investigations, and legal proceedings under the Act of 1994 even after the Act of 2017 came into effect, allowing the authorities to conduct the audit for the relevant period.

In conclusion, the court refuses to grant interim relief, stating that the authorities are entitled to undertake the audit under the Act of 1994 for the applicable period. The parties are directed to file affidavits, and the case is listed for hearing in the upcoming month.