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2024 Supreme(Del) 622
IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Sachdeva, Ravinder Dudeja, JJ.
M/s. Hardicon Ltd. Through Its Managing Director-mr. Rajeev Aggarwal - Appellant
Versus
Union of India Through Secretary, Ministry of Finance - Respondent
W.P.(C) 3778 of 2024 & CM. Appls. 15555 of 2024, 15556 of 2024
Decided On : 14-03-2024
Mr. Ramesh Singh, Senior Advocate with Mr. Sumit K. Batra and Ms. Priyanka Jindal, Advocates, for the Petitioner.
Mr. Niraj Kumar, Senior Central Government Counsel for UOI.
Mr. Harpreet Singh, Senior Standing Counsel with Ms. Suhani Mathur and Mr. Jatin Gaur, Advocates, for the Respondent.
IMPORTANT POINT
The court's decision highlighted the importance of the validity of Rule 5A of the Service Tax Rules, 1994 in governing the initiation of service tax audit proceedings and the need for judicial oversight on the final orders.
Headnote:
Rule 5A - Service Tax Audit - The court considered the challenge to the validity of Rule 5A of the Service Tax Rules, 1994, which governed the initiation of service tax audit proceedings. The court allowed the proceedings to continue but directed that any final order should not be given effect without the leave of the Court.
Fact of the Case:
The petitioner sought quashing of a service tax audit initiation letter and a subsequent Show Cause Notice, challenging the validity of Rule 5A of the Service Tax Rules, 1994.
Finding of the Court:
The court allowed the proceedings to continue but directed that any final order should not be given effect without the leave of the Court.
Issues: Validity of Rule 5A of the Service Tax Rules, 1994 and the initiation of service tax audit proceedings.
Ratio Decidendi: The court considered the petitioner's challenge to the validity of Rule 5A and allowed the proceedings to continue, but imposed a restriction on the final order.
Final Decision: The court directed that the proceedings on the Show Cause Notice may continue, but any final order passed before the next date of hearing shall not be given effect without the leave of the Court.
ORDER
1. Petitioner seeks quashing of letter dated 26.12.2017, whereby a service tax audit was initiated against the petitioner for the period 2012-2013 to 2017-2018. Petitioner further seeks quashing of Show Cause Notice dated 24.10.2018, which was issued pursuant to the audit.
2. Learned senior counsel for the petitioner submits that the subject proceedings have been initiated in terms of Rule 5A of the Service Tax Rules, 1994. He submits that the validity of the said Rule is under challenge and a reference before a larger Bench is pending in W.P. (C) 13325/2018, titled KTC (India) Pvt. Ltd. Vs. Commissioner of Central GST Audit-II, Delhi and other batch of matters.
3. Issue notice. Notice is accepted by learned counsel for respondents, who submits that petitioner had participated in the audit proceedings and the Show Cause Notice has been issued pursuant to audit carried out.
4. In view of the above, it is directed that the proceedings on the Show Cause Notice may continue and final order, if any, passed before the next date of hearing shall not be given effect to without the leave of the Court.
5. List on 12.08.2024.
