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TMI Blog2014 (1) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... common judgment. Factual matrix of the cases are that the Central Excise Department on various dates has issued intimation under Rule 5A(2), to assessees for making a reference to conduct an Audit under EA-2000. For the said purpose, the necessary documents were demanded from the petitioners-assessees. The petitioners-assessees objected and also challenged the vires of Rule 5A(2) of the Service Tax Rules, 1994 interalia on the ground that the provision of Rule 5(A)(2) are contrary to the provision of Section 72 of the Service Tax Act. In order to resolve the dispute, Counsel for the petitioners submits that Writ Petition No. 11954 (MB) of 2013 be treated to be leading petition and in the said petition, the petitioner-assessee has asked for the following relief:- "A. A writ, order or direction in the nature of Certiorari quashing Sub Rule (2) of Rule 5-A of the Service Tax Rules, 1994, empowering opposite party no. 2 to depute departmental officers as Auditor being arbitrary, illegal and ultra vires to the provisions of the Finance Act, 1994, contained in Annexure No.9 to the writ petition. B. A writ, order or direction in the nature of Certiorari quashing the impugned letter c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serting Rule 5A(2) of the Service Tax Rules and clarified that with effect from 12.05.2007 vide Section 83 of the Finance Act, 2007, that Section 14-AA of the Central Excise Act is applicable to the Service Tax, to empower the Commissioner of Central Excise, to order for cost audit by a Cost Accountant to study the abnormal legislation of CENVAT Credit under Section 14-AA. Hence, with effect from 28.05.2012, Section 72-A has been inserted in the Finance Act, 1994, for the purpose of Special Audit under Service Tax. On perusal of the provisions of Section 94 of the Service Tax Act, it is evident that the Central Government is power to make Rules for carrying out provisions of Chapter V i.e. Rules can only be framed for the provisions which are noted in Chapter V of the Finance Act, therefore, no rule can be framed by the Central Government in respect of any provision of the Act which is not specified in the Chapter V of the Finance Act, 1994. There is no provision in the Finance Act, 1994 for framing of Rules in respect of the audit of the accounts of private person or Companies or Firms who are paying service tax by self assessment, therefore, Rule which empowers service tax offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rule making power of the authority framing the rule. If either of these two conditions is not fulfilled, the rule so framed would be void. The position remains the same even though sub-section (2) of section 281 of the Act has specifically provided that after the rules are framed and published they shall have effect as if enacted in the Act. In other words, in spite of the provision of sub-section (2) of section 281, any rule framed under the Cantonment Act has to fulfil the two conditions mentioned above for their validity. The observation of this Court in Jestamani Gulabrai Dholkia v. Scindia Steam Navigation Company, (1961) 2 SCR 811, relied upon by Mr. Aggarwal, that a contract of service may be transferred by a statutory provision, does not at all help the appellants. There can be no doubt that a contract of service may be transferred by statutory provisions, but before a rule framed under a statute is regarded a statutory provision or a part of the statute, it must fulfil the above two conditions. Rule 5-C was framed by the Central Government in excess of its rule making power as contained in clause (c) of sub-section (2) of section 280 of the Cantonment Act before its ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation Act, 2005. So, the arguments advanced by the learned counsel for the petitioners-assessees is vague. Further, he submits, at the strength of written note, that the audit will be conducted by a qualified Chartered Accountant registered with the Institute of Chartered Accountant of India and as per law. We have heard both the parties at length and gone through the material available on record. Section 72-A of the Finance Act, 1994, on reproduction, read as under:- "72A. Special audit.-(1) If the Commissioner of Central Excise, has reasons to believe that any person liable to pay service tax (herein referred to as "such person"),- (i) has failed to declare or determine the value of a taxable service correctly; or (ii) has availed and utilized credit of duty or tax paid- (a) which is not within the normal limits having regard to the nature of taxable service provided, the extent of capital goods used or the type of inputs or input services used, or any other relevant factors as he may deem appropriate; or (b) by means of fraud, collusion, or any willful misstatement or suppression of facts; or (iii) has operations spread out in multiple locations and it is not possib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e audit report may be made available to the assessee and a proper opportunity will also provided to him, as per law. Rule 5-A of the Service Tax Rules, 1994 is just to facilitate the above-mentioned provisions. On reproduction, it read as under:- "5A. Access to a registered premises.-(1) 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. (2) 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,- (i) the records as mentioned in sub-rule (2) of rule 5; (ii) trial balance or its equivalent; and (iii) 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 b ..... 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