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TMI Blog2014 (8) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of assessee. Likewise the CBEC instruction dated 1.1.2008, being in furtherance of Rule 5A(2), which rule is ultra-vires the Finance Act, 1994, is void for the same reasons. - Decided in favour of assessee. The Service Tax Audit Manual, 2011 is merely an instrument of instructions for the service tax authorities; it is but obvious that it is not a statutory instrument and has no statutory force. Thus, Rule 5A(2) cannot be sought to be justified as against it. - Decided in favour of assessee. - W. P. (C) 3774/2013, C. M. No. 7065/2013 - - - Dated:- 4-8-2014 - S. Ravindra Bhat And Vibhu Bakhru,JJ. For the Petitioner : Sh. J. K. Mittal and Sh. Vipul Dubey, Advocates. For the Respondents : Sh. Anuj Aggarwal and Sh. Gaurav Khanna, Advocates, for Resp. No.1. Sh. Rahul Kaushik, Advocate, for Service Tax Department. ORDER Mr. Justice S. Ravindra Bhat 1. The assessee (hereafter the petitioner ) approaches this Court under Article 226 of the Constitution of India, challenging a letter dated 07-11-2012 of the respondent Commissioner seeking records for the period 2007-08 till 2011-12 for scrutiny of an audit party; Rule 5A (2) is also impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt like the Service Tax Manual. Finally, the petitioner submits, relying on Sahara India v. CIT (2008) 14 SCC 151 that in any event, an audit, since it carries civil consequences, cannot be ordered without a notice issued to the assessee, indicating reasons for the audit. 5. The respondent justifies the impugned notice and introduction of Rule 5A, arguing that the rule authorizing audit was made pursuant to the power conferred under Section 94 of the Finance Act, 1994 and not pursuant to Section 72A. The rule is also sought to be justified by invoking the Service Tax Audit Manual, 2011 as the basis for ordering an audit. The respondent states that after its initial letter, it had sent repeated reminders to the petitioner (dated 26.12.2012, 30.1.2013, 8.3.2013) before it had issued summons on 17.5.2013. It urges that the petitioner alleged arbitrariness of the rule only on 1.4.2013 for the first time; until then, the petitioner had maintained that it would cooperate with the authorities of the respondent towards completing the audit. These delaying tactics of the petitioner, the respondent argues, betray mala fides. 6. Rule 5A though titled Access to a registered premises , d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been furnished by the assessee. 4. A copy of the list furnished by the assessee would be sent by the jurisdictional superintendent to the audit section. 5. The audit team or any other officer authorised by the Commissioner to visit the registered premises of an assessee shall give prior intimation to the asseseee along with the list of documents that he requires for the purposes of scrutiny, verification or audit. 6. That taxpayer shall provide the records as required by the authorized officer within a period of fifteen days from the date of request. In case, the taxpayer is unable to produce any of the records called for within the stipulated time, he shall intimate the same along with reasons, for non-production of records, and the officer may also further time for production of such records keeping in view the overall facts into account. 7. These amendments have been made in the service tax rules to enable the duly authorised offices to carry out audit or scrutiny as may be necessary to safeguard the interest of revenue. However, it may be ensured that only such records are demanded which are necessary for conducting such audit scrutiny or verification. 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 94, the Revenue could not show any other substantive provision which justifies a probe into the records of the assessee, under conditions akin to those contemplated by Rule 5A(2). The Revenue was also unable to show the compulsion of arming authorities with such sweeping powers, under the Rules. 10. It is well known that if the legislature contemplates a situation and enacts or provides for a part of it, the other parts are deemed to have been excluded. The law is also well settled that a rule acquires statutory force, so long as it first, conforms to the provisions of the statute under which it is framed and second, it must be within the rulemaking power of the executive authority charged with framing the rules. Ref. General Officer, Commanding-in-Chief v. Dr. Subhash Chandra Yadav, (1988) 2 SCC 351 and Dr.Mahachandra Prasad Singh v. Honourable Chairman, Bihar Legislative Council and Ors., (2004) 8 SCC 747. The generality of the rule-making power conferred under Section 94(1) is thus only to the extent that rules made in exercise of that power are in conformity with the provisions of the statute. The reasoning for this is stated in simple terms in Mahachandra Prasad Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls the necessary inference that the Parliament did not intend to provide for a general audit that every assessee may be subjected to, on demand . This Court is thus of the opinion that any attempt to include provision for such a general audit through the back-door, such as through the impugned rule, is ultra-vires the rule making power conferred under Section 94(1). Rule 5A(2) must consequently be struck down. 12. Likewise, this Court finds that the impugned CBEC instruction, being in furtherance of Rule 5A(2), which rule is ultra-vires the Finance Act, 1994, is void for the same reasons. Executive instructions without statutory force, cannot possibly override the law; consequently, any notice, circular, guideline etc. contrary to statutory laws cannot be enforced. (See Rajasthan State Industrial Development and Investment Corporation v. Subhash Sindhi Cooperative Housing Society Jaipur (2013) 5 SCC 42; B.N. Nagarajan v. State of Mysore, AIR 1966 SC 1942. As observed in B.N. Nagarajan (supra): It was settled by this Court in Ram Jawaya Kapur v. The State of Punjab: [1955] 2 SCR 225 that it is not necessary that there must be a law already in existence before the executive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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