The main legal point established in the judgment is that the CAG’s duty is to audit receipts payable into the Consolidated Fund of India and each State and Union Territory, and the statutory scheme does not extend to auditing the accounts of a private entity without specific statutory provisions.

JUDGMENT :

MILIND N. JADHAV, J.

1. Heard Mr. Bharat Raichandani, learned counsel for the petitioner and Mr. Pradeep Jetly, learned senior counsel alongwith Mr. J.B. Mishra, learned counsel for the respondents.

2. This petition has been filed under the provisions of Articles 226 and 227 of the Constitution of India by the petitioner, Kiran Gems Private Limited, a private limited company, seeking quashing of notice / intimation dated 10.01.2019 issued by Superintendent, Range-III, CGST, Division IV, Mumbai East, inter alia, intimating that petitioner’s case has been selected for scrutiny / audit by LAP-XII CERA (GSTA) for the period January 2019 to March 2019 and to submit information / records for the period 2015-16 to 2017-18 to the officers of CERA for audit.

3. Central Excise Revenue Audit (for short ‘CERA’) is conducted under the overall supervision of the Principal Director of Audit, (Central) Kolkata in the Indian Audit Department of Government of India.

4. Petitioner's primary assertion is that the impugned notice / intimation seeking audit of petitioner's accounts is without jurisdiction i.e it has been issued without invoking the provisions of statutory laws under which a special audit, as purported, can be conducted. The period for which the accounts are sought to be audited appear differently in the covering letter and the annexure to the intimation letter. There is no enabling statutory provision available to the respondents to seek information pertaining to pre and post GST era for CERA audit from a private entity; such action suffers from a jurisdictional error since power to audit being a statutory power traceable to the relevant statute being absent in the present case. In the affidavit-in-reply respondents have contended that power to conduct CERA audit has been invoked under the provisions of Section 16 of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service, Act 1971 (for short ‘the CAG’s (DPC) Act’); the said section cannot apply to a private entity as the said Act provides for audit by the Comptroller and Auditor General of India (for short ‘the CAG’) of all receipts which are payable into the Consolidated Fund of India and of each State and each Union Territory. This contention of respondents is challenged by the petitioner on the ground of lack of inherent jurisdiction being not available to the respondents to invoke the provisions of Section 16 of the CAG’s (DPC) Act in the petitioner’s case.

5. Before we advert to the submissions made by learned counsel for the parties, it will be apposite to briefly refer to the relevant facts:-

5.1. Petitioner is engaged in manufacture and export of cut and polished diamonds and is registered as service provider under the provisions of Finance Act, 1994 bearing service tax registration No.AADCK1665MST001.

5.2. Petitioner had been paying service tax diligently and had been filing ST-3 returns periodically as required.

5.3. By email dated 10.01.2019, office of respondent No.3 i.e. Assistant Commissioner of Central Tax, intimated the petitioner that CERA audit was being conducted for the period from January 2019 to March 2019 and that petitioner’s case was selected for scrutiny / audit by LAP-XII CERA (GSTA). Petitioner was called upon to submit information / records for the period 2015-16 to 2017-18 as per annexure attached to the letter directly to the officers of CERA. It may be mentioned that from July, 2017 the Goods and Services Tax (GST) regime came into force and the erstwhile service tax stood subsumed in GST.

5.4. Annexure to the impugned letter called upon petitioner to produce the following record for the period 2015-16 to 2017-18:

(i) Annual financial statement viz. Profit & Loss Account, Balance Sheet, Trial Balance;

(ii) Tax Audit Report, Cost Audit Report;

(iii) Cenvat register containing details of Cenvat credit availed and utilised;

(iv) List of MOUs, contract / agreements signed with other companies to whom services have been provided / re