Service Tax Audit

[Guest]

Respected all forum members,

I have one question regarding applicability of audit of service tax in case of private limited company converted from partnership firm?

we have received new registration number for private limited company in march 2015 and filed our return accordingly..

whether service tax audit is applicable to private limited company only or its applicable to partnership firm also??

[KASTURI SETHI]

As per Rule 5A of Service Tax Rules, 1994, every assessee is subject to scrutiny, verification and audit. However, regarding the frequency of audit, it depends upon the amount of ST being paid by an assessee. Every firm is subject to audit.

[KASTURI SETHI]

Though Rule 5 A (2) has been held ultra vires by Delhi High Court but verification/scrutiny of records is going on under Rule 5 A (1)

[Guest]

Thank you,,

We have no objection against this audit.. but my question is whether service tax audit is applicable to for new registration number or it is also applicable to closed partnership firm??

Whether audit department have power to verified document of old partnership firm as they had issue a notice to private limited company only.

[Ganeshan Kalyani]

Ms. In addition to the view submitted by Sri Kasturi Sir, my views are as below:

Service tax is based on self assessment method. If the payment of tax and return is found to be satisfactory to the authority then the assessment is deemed to be completed. However is required the department may initiate audit. Thanks.

[KASTURI SETHI]

Pl. refer to CA Monica Patel's queries.

Audit is to be conducted whether the unit is new or old or closed. When any registration is surrendered, an undertaking is got from the assessee to the effect that he would produce records for audit as and when required by the department.

Yes the department has power. Constitution of any firm may be changed. Letter may be addressed to the new firm. Audit has to be conducted in respect of unit old unit.

I also agree with the views of Sh.Ganeshan Kalyani, Sir.

[Guest]

Thank you so much for your valuable reply..

AI Summary

Service Tax Audit Applies to Converted Entities Under Rule 5A; Old Firm Documents Can Be Verified A forum member inquired about the applicability of a service tax audit for a private limited company that was converted from a partnership firm. The discussion clarified that, under Rule 5A of the Service Tax Rules, 1994, all assessees are subject to audit, regardless of their status as a new or closed entity. The forum also noted that the audit department has the authority to verify documents of the old partnership firm, even if the notice was issued to the private limited company. The self-assessment method of service tax was also mentioned as part of the audit process.