Subordinate legislation cannot override the parent Act; Rule 5A(1) was restrained pending writ proceedings.

Rule 5A(1) of the Service Tax Rules was treated as prima facie vulnerable because subordinate legislation cannot override the parent statute and can only operate within Section 82 of the Finance Act. The order also noted that Rule 5A(2) had already been held ultra vires by the Delhi High Court, and that access under sub-rule (1) would serve no useful purpose if demand could not be made under sub-rule (2). As the summons process did not clearly show the required inquiry precondition and the 20 January 2015 circular may not have been followed, the Court granted interim protection against coercive steps.

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Issues: Whether Rule 5A(1) of the Service Tax Rules, 1994 could be restrained on a prima facie view that it was contrary to Section 82 of the Finance Act, and whether coercive steps could be taken against the petitioner pending the writ petition.

Analysis: The challenge to the rule was considered prima facie well founded because a subordinate legislation cannot override the parent enactment and can only supplement it. The order also noted the view that Rule 5A(2) had already been declared ultra vires by the Delhi High Court and that, if demand could not be made under sub-rule (2), access under sub-rule (1) would serve no useful purpose. As regards the summons, the order recorded that the inquiry pre-condition for issuance of summons was not apparent and that the circular instructions dated 20 January 2015 may not have been followed. Pending further hearing, protection was granted against coercive steps.

Conclusion: Rule 5A(1) was restrained against the petitioner at the interim stage, and the respondents were left free to proceed only under Section 82 of the Finance Act in accordance with law, without coercive action except with leave of the Court.

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