CAG audit powers cannot be used to compel records from a private company without express statutory authority.

The Bombay High Court held that the Comptroller and Auditor General's audit powers are confined to the constitutional and statutory scheme and do not extend to a private company absent express authority. Section 16 was treated as governing audit of receipts into the Consolidated Fund, not as a general power to demand production of records from a private entity. Section 20 applies only where a body or authority is referred for audit by the President, Governor, or Administrator, and no such referral was shown. Because Parliament uses express audit machinery and safeguards where private assessee records are to be examined, the notice and annexure seeking a CERA audit were without jurisdiction and unsustainable.

---

---

Issues: Whether the Central Excise Revenue Audit could call for and audit the records of a private company under Section 16 of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971, and whether the impugned communication was sustainable in the absence of statutory backing.

Analysis: The statutory scheme of the Constitution and the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 confines the Comptroller and Auditor General's audit functions principally to the accounts of the Union, States, Union Territories, their departments, and specified bodies or authorities. Section 16 is directed to audit of receipts payable into the Consolidated Fund and does not confer a general power to audit a private entity directly. Section 20 contemplates audit of a body or authority only when requested by the President, Governor, or Administrator, and no such request or sanction was shown. The special audit provisions under the service tax and other fiscal statutes invoked by the petitioner demonstrate that where Parliament intended audit of an assessee's accounts, it created express machinery and procedural safeguards. In that backdrop, reliance on Section 16 to require a private company to produce records for CERA audit was beyond jurisdiction.

Conclusion: The impugned notice and annexure were without jurisdiction and could not be sustained; the challenge succeeded.

---