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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 ..... ervice Tax Rules, 1994, brought into force by Notification no. 45/2007 dated 28.12.2007 as well as the instruction of the Central Board of Excise and Customs ("CBEC") no. F. No. 137/26/2007-CX.4 dated 1.1.2008. It is contended that the powers of an assessing officer to call for records in respect of any period during which the respondents seek to intensively scrutinize receipts etc. i.e. a special audit can be ordered by recourse to Section 72-A of the Finance Act, 1994. Barring these, the Finance Act, does not contain any substantive power to call for records for scrutiny as is permissible under Rule 5A(2) or for the purpose of scrutiny by any authority outside of those created under the Act, such as the Comptroller and Auditor General's office. 3. The petitioner relies on Municipal Corporation v. Birla Cotton, Spinning and Weaving Mills,AIR 1968 SC 1232 and General Officer, Commanding in Chief v. Subhash Chandra Yadav, (1988) 2 SCC 351, and argues that a rule must conform to the statute under which it was framed, and must be within the rule making power of the authority. The submission is that the impugned rule is not only unjustified in the context of the substantive provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 be. The impugned CBEC instruction reads: "... A new Rule 5A has also been incorporated in the said Rules to prescribe that an officer authorised by the Commissioner shall have access to any premises registered under the Service Tax Rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue and that the assessee shall provide, on demand, the specified records including trial balance or the equivalent. It may be noted that this rule does not envisage issue of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng matters, namely: - xxx xxx xxx" 8. The only provision in Chapter V of the Finance Act on scrutiny and audit of records of the assessee is Section 72A of the Finance Act, 1994, which reads: "72A. (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 utilised 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 wilful misstatement or suppression of facts; or (iii) has operations spread out in multiple locations and it is not possible or practicable to obtain a true and complete picture of his accounts from the registered premises falling under the jurisdiction of the said Commissioner, he may direct such person to get his accounts audited by a chartered accountant or cost accountant nominated by him, to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the meaning of delegated legislation and the extent of the power to make it. The true extent of the power governs the legal meaning of the delegated legislation. The delegate is not intended to travel wider than the object of the legislature. The delegate's function is to serve and promote that object while at all times remaining true to it. That is the rule of primary intention. Power delegated by an enactment does not enable the authority by regulations to extend the scope or general operation of the enactment but is strictly ancillary. It will authorise the provision of subsidiary means of carrying into effect what is enacted in the statute itself and will cover what is incidental to the execution of its specific provision. But such a power will not support attempts to widen the purposes of the Act to add new and different means of carrying them out or to depart from or vary its ends. ( see Section 59 in chapter Delegated Legislation in Francis Bennion's Statutory Interpretation 3rd Edn. )." (emphasis added) 11. The mere fact that a rule-making power is phrased in terms that indicates a general delegation of power,cannot lead to the inference that such power may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, 1994 authorises that Section 37B, inter alia, of the Central Excise Act, 1944 "shall apply, so far as may be, in relation to service tax, as they apply in relation to a duty of excise". Section 37B of the Central Excise Act, 1944 reads: "Section 37B. Instructions to Central Excise Officers. The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board : xxx xxx xxx" 14. It is clear that the CBEC, under the power vested in it by Section 37B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 issues these circulars as instructions with respect to the levy of service tax. Consequently, such circulars cannot possibly override the statute, or be contrary to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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