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Recently Honorable Allahabad High Court in case of M/S A.C.L. Education Centre (P) Ltd. & Others V/s. Union Of India Thr. Secy. Deptt. of Revenue, New Delhi & Others held that as per Section 72A of the Finance Act, 1994 only a CA/CMA appointed by Commissioner can conduct audit under Service Tax. Rule 5A of Service Tax Rules, 1994 authorize Departmental Personnel’s to demand the documents just to facilitate the correctness of books of accounts and ultimately, the audit will be conducted by the Audit Party headed by the CA/CMA deputed by the Commissioner.
  
Here, we would also like to mention that Section 72A was inserted w.e.f. 28.05.2012. Therefore prior to 28.05.2012; rule which empowers service tax officials to carryout scrutiny, verification, checks and for making available information as mentioned in sub rule (2) of Rule 5A by audit party is ultra vires.

Conclusion:

As per the decision of Honorable High Court, audit under Service Tax can be conducted only w.e.f. 28.05.2012 that too by the Audit Party through authorized person under Section 72A i.e. CA/CMA. In other words, department solely is not authorised to conduct audit.



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