Service tax audit under Rule 5A after CGST repeal raised serious doubt, and interim protection was granted.

After the CGST Act, 2017 came into force, the Court noted that Chapter V of the Finance Act, 1994 had been omitted and examined the repeal-and-saving clause in Section 174. On a prima facie reading, it expressed serious doubt whether Rule 5A of the Service Tax Rules, 1994 continued to authorise a fresh service tax audit against a private entity. Finding a prima facie case for protection, the Court stayed the impugned communication and restrained further audit proceedings pending notice.

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Issues: Whether, after the coming into force of the Central Goods and Services Tax Act, 2017, the respondents could invoke Rule 5A of the Service Tax Rules, 1994 to initiate a fresh service tax audit against the petitioner, and whether ad interim protection was warranted.

Analysis: The order noted that Chapter V of the Finance Act, 1994 stood omitted under Section 173 of the Central Goods and Services Tax Act, 2017, and that Section 174 contained repeal and saving provisions. On a prima facie reading of the saving clause, the Court recorded serious doubt whether Rule 5A of the Service Tax Rules, 1994 survived in a manner that would permit fresh audit proceedings against private entities. The Court therefore found a prima facie case for interim protection pending notice.

Conclusion: Ad interim relief was granted by staying the impugned communication and restraining further service tax audit of the petitioner.

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