Delhi High Court Invalidates Service Tax Audit Notice (2)

The High Court of Delhi allowed a writ petition challenging a notice for service tax audit issued under Rule 5A(2) of the Service Tax Rules, 1994. Citing a previous decision deeming Rule 5A(2) ultra vires, the court invalidated the notice and subsequent summons, quashing them. The petitioner succeeded in their challenge, with no costs awarded.

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Issues: Challenge to notice for service tax audit under Rule 5A(2) of Service Tax Rules, 1994.

In this judgment, the High Court of Delhi considered a writ petition challenging a notice dated 16-2-2011 issued by the Superintendent (Audit), Group-B-VI from the office of the Commissioner of Service Tax, Delhi. The notice pertained to an intimation for conducting a service tax audit, with reference to an earlier letter dated 28-12-2010. The petitioner's concern was being audited under Rule 5A of the Service Tax Rules, 1994, as highlighted by the petitioner's counsel. The counsel also brought to light a previous decision of a Division Bench in Travelite (India) v. Union of India, where Rule 5A(2) was deemed ultra vires the Finance Act, 1994, and void. Given the striking down of Rule 5A(2) by the Division Bench, the High Court concluded that the impugned notice under the same rule was invalid, leading to the quashing of the notice and subsequent summons issued on different dates in 2012. The writ petition was allowed, and no costs were awarded in this matter.

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