Powers of Audit

[rajkumar shukla]

DOES THE CENTRAL EXCISE ACT EMPOWER THE DEPARTMENT TO CONDUCT AUDIT? IF YES UNDER WHICH SECTION. REPEAT   WHICH SECTION?

[YAGAY and SUN]

central Excise Act,1944 provides for following types of Audits:-

1. Special Audit for Valuation purpose under section 14A.
2. Special Audit for CENVAT credit purpose under Section 14AA.
3. Excise Audit 2000.

[rajkumar shukla]

DEAR SIR.

WHAT I MEANT WAS AUDIT BY DEPT , NOT BY COST OR CHATERED ACCOUNTANTS. KINDLY QUOTE AUTHORITY OF EA 2000 UNDER Central Excise Act,1944. PL DO NOT QUOTE RULES IN THIS REGARD AS RULES DERIVE ITS POWERS FROM THE ACT.

[sv bhasker]

Sir,

There is no Section in CE Act that provides for audit by dept officers  . But Section 37(1) of Central Excise Act empoweres the govt  to make Rules that allows auditing by dept officers. . 

[rajkumar shukla]

BUT SIR  AS PER SECTION37(1) ,GOVT IS EMPOWEREDTO MAKE RULES TO CARRY INTO EFFECT THE PURPOSE OF THIS ACT.WHEN THE ACT ITSELF IS SILENT ON THIS POINT ,HOW THE RULES CAN BE MADE.SECTION 37(2) ALS DOES NOT  CONTAIN ANY SUCH PROVISION.

[sv bhasker]

SIR,

THE PURPOSE OF ACT IS TO COLLECT TAXES UNDER THE AUTHORITY OF LAW. IT IS THE RESPONSIBILTY OF CE OFFICERS TO AUDIT AND SEE WHETHER THE PROVISIONS ARE COMPLIED WITH AND APPLICABLE TAXES ARE PAID .  IT MAY NOT BE POSSIBLE TO SPELL OUT EACH AND EVERY ACTIVITY TO BE DONE BY CE OFFICERS IN THE ACT. FOR EXAMPLE YOU MAY BE FILING MONTHLY RETURNS WITH DEPT. THERE MAY NOT BE ANY SECTION WHICH PROVIDES FOR THAT. STILL RETURNS ARE FILED WITH DEPT UNDER RULE 12 OF CE Rules, 2002. SO WE HAVE TO FOLLOW RULES AS WE DO WITH SECTIONS OF LAW.

The Rules derive the authorization under the provisions of the relevant Act passed by the legislature.

[rajkumar shukla]

BUT YOU WOULD AGREE THAT COURTS HAVE STRUCK DOWN THE RULES MADE IN THIS REGARD UNLESS THE ACTION IS AUTHORISED BY THE ACT.REFER FINANCE ACT GTO EPISODE AND REVERSE CHARGE MECHANISM EPISODE.

 

[DEV KUMAR KOTHARI]

Incomplete information that too without queriest own views render the discussion forum less effective, as we can observe in the trail on this query. When queriest is a learned person, he can better serve purpsoe of discussion by bringing his own knowledge in his query for further discussion.

[rajkumar shukla]

 I am consistently giving my viewpoint as is evident from the trail.you considered views are solicited on the issue.

AI Summary

Departmental audit powers under central excise: statutory special-audit provisions exist, but rule-based audits face legal limits.
The Act provides for special audits for valuation and CENVAT credit and administrative audit schemes under rules, but lacks an express provision authorising departmental officers to conduct general audits; reliance on delegated rulemaking to support audit powers raises questions of validity where rules may exceed the statute's remit.