Calcutta HC freezes Service Tax Audit Post-GST [Read Order]

Calcutta HC freezes Service Tax Audit Post-GST [Read Order]

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While granting an interim relief to the petitioners, Infinity Bnke and Infinity Infotech, the Calcutta High Court has granted stay against audit notices issued by Central Tax officers for conducting audit of last 5 years under service tax, after the introduction of GST.

Before the High Court, the petitioners pleaded that the provisions of clause (k) of subsection (2) of Section 94 of the Finance Act, 1994 is unguided and gives uncontrolled power of delegation.

With regard to the issue of the vires of similar provisions of the Finance Act, the petitioners relied on the decision of the Delhi High Court in Travelite (India) Vs. Union of India wherein the Court held that the provisions are ultra vires.

“Since the provisions have been struck down, the notice impugned herein issued on such basis needs to be quashed also,” the petitioners argued.

While granting the stay order, Justice Debangsu Basak said that “Since sub-rule 2 of Rule 5A of the Service Tax Rules, 1994, as substituted by notification dated December 25, 2014 was declared ultra vires by Mega Cabs Pvt. Ltd. (supra), it would be appropriate to grant interim stay of the proceedings. Such stay will continue till November 30, 2018 or until further orders whichever is earlier.”

Advocates J.K. Mittal, Paritosh Sinha, Amitava Mitra and P. Chaturvedi appeared for the petitioners.

The matter was listed to November 2018.

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