FIASCO IN SERVICE TAX AUDIT AND THE INVASION OF OUTSIDERS IN TAX DOMAIN.

            In the recent decision of the Hon’ble High Court of Gujarat dated 03.12.2014, the process of Audit to be conducted by the CAG questioning the provisions of Sec. 72 and Rule 5A and the powers of the Commissioner to authorize any person to conduct Audit.

            In fact, CESA Mumbai, had in the past brought this issue to the attention of the authorities and had requested that the Service Tax Rules should not be made complicated to create more and more litigations to linger over years together. 

            It was also brought to notice that various Courts are giving rulings contrary to the provisions of Sec 72 of the Finance Act and now on Rule 5A of the Service Tax Rules, and to restrain the authority of the department to conduct Audit on the records of Service Tax assesses.

            A lesson should be learnt, very fast, that the departmental officers are competent to enforce the law in its true letters and spirit and there is no necessity at all the create a lobby [of CA’s?] like that of CHAs in the Customs Houses of CA’s in the Income Tax department, which practically stops the interaction between the officers [Law enforcers] and the tax payers [assesses].

            Another thing to be kept in mind is that the officers of the Department are appointed after undergoing the due process of selection and are accountable throughout and not like the CA’s or their employees, who are basically outsiders and not at all in the habit of taking the responsibility as is evident from the fact that every audited balance sheet signed by them carries a rider that the report is based on the records produced before them.  In such an event how can these persons bring forth the true and correct position of the assessee.

            CESA also wishes to bring to your kind notice that the department is encouraging use of only the websites managed by NIC for making all the official correspondences rather than using the personal e-mail addresses of different internet providers, gmail, yahoo, etc. 

CESA strongly advocates that on similar lines, while implementing the Service Tax Act and the Rule, the influence and interference of the outside personnel especially the CA fraternity should be debarred & discouraged and the expertise and ability of the departmental officers should be trusted, relied upon and encouraged.  If at the Department feels that the officers are lacking on any count, they should be educated.  

In our country, even the school going child knows, if there is an income then there is a tax, known as Income Tax.  Similarly if the child is returning from abroad, he knows that he has to pay Customs Duty at the Airport.  Likewise, awareness should be created that if any Service is provided or received, then a Tax is to be paid, known as Service Tax.  

The Service Tax should not be complicated like the erstwhile TI 68 under the SRP scheme and it should be made so simple that even a layman can identify his tax liability and pay the same without any hitch.  Further in the syllabus of final year B Com students, Government has prescribed a Chapter on Indirect Tax which is so elaborate that a 20 year old can grasp, then what is the necessity to knock the doors of CAs for fecilitation of Tax liability of service tax. 

We are already passing through an embarrassing position while encountering Audit after several judgments.  We hope the Board will end the fiasco at the earliest, and curtail the invasion of outsiders in our domain.