Audit under Service Tax can continue post GST :HC

Interim Order of Kolkata High Court in matter of M/s. Gitanjali Vacation ville Private Limited & anr. Vs. The Union of India & anr.

Facts of the Case

The impugned notice dated August 24, 2018 and the two subsequent reminders, the authorities are proposing to conduct an audit under the provisions of the Chapter V of the Finance Act, 1994. The Petitioner challenges these communications on the ground that they were issued without jurisdiction as the Central Goods and Services Tax Act, 2017 repeals Chapter V of the Finance Act, 1994 and further that 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.,

Audit under Service Tax can continue post GST : HC

Decision of the Honble Kolkata High Court

The High Court held that 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 the Chapter V of the Finance Act, 1994, then notwithstanding the omission of the Chapter V of the Finance Act, 1994 under Section 173, the same continues to apply . On a prima facie reading of 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 undertake an audit for the period when the Act of 1994 was applicable, the authorities are entitled to do so.

Thus, the High Court declined to grant interim stay.