The Calcutta High Court has held that the service tax audit under Finance Act, 1994 after the GST rollout is permissible under law.
The authorities proposed to conduct an audit against the petitioners under the provisions of Chapter V of the Finance Act, 1994. The petitioners contended before the High Court that the Central Goods and Services Tax Act, 2017 repeals Chapter V of the Finance Act, 1994.
It was contended that the provisions of Chapter V of the Finance Act, 1994 stands omitted and an audit contemplated under Chapter V of the Finance Act, 1994 is not saved by the provisions of Section 174 of the Act of 2017.
Allowing the contentions, Justice Debangsu Basak observed 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 Chapter V of the Finance Act, 1994, then notwithstanding the omission of 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 SubSection (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other legal proceedings and that, such proceedings may be instituted, continued or enforced as if such Act had not been repealed,” the Court said.
“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 to undertake an audit for the period when the Act of 1994 was applicable. The authorities are entitled to do so,” the Court added.Subscribe Taxscan AdFree to view the Judgment