DDT 1871 – 04.06.2012 - CAG Evades Service Tax? Show Cause Notice to be issued?
DDT 1878 – 13.06.2012 - Evasion of Service Tax by CAG - No Notice - Yet…
Levy of Service Tax: Is CAG really a Chartered Accountant? - Cob(Web) - 295, June 07, 2012
Board has examined the issue: The Board clarification says, “Reportedly some field formations are inclined to take a view that such ‘audit fee' collected by the CAG is leviable to service tax under the authority of the inclusive portion of the definition of “practicing chartered accountant” read with the relevant definition of the taxable service”.
Reportedly inclined? - who reported – where? Is the Board not aware of a Chief Commissioner dashing off a letter to all Chief Commissioners that the CAG is liable to pay Service Tax? And how does the Board get reports that some officers are inclined – how do we make them straight?
Anyway Board clarifies that:
CAG is not a Chartered Accountant: The services of CAG are not services as are rendered by a chartered accountant even though both may be engaged in the sphere of the auditing. The scope of work of the CAG goes far beyond that of a statutory company auditor and is often carried out by persons who may not even be professional chartered accountants. These audits are done in terms of section 18 of the CAG (Duties, Powers and Conditions of Service) Act, 1971, which is entirely different from the powers vested in a chartered accountant under the Chartered Accountant Act, 1949. CAG is a constitutional authority and by no stretch of imagination be covered by the meaning of expression “concern” appearing in the definition of “practicing chartered accountant”.
Not Covered under BSS: The audit activity is not an outsourced function but is carried out in statutory fulfilment of duties. Thus, the services by CAG would also not be covered by the service head “Business Support Service”.
Board wants the Chief Commissioners and Commissioners to communicate the Board Circular to the field and Service Tax assesses. Should this be communicated to all Service Tax assesses? How are they bothered whether CAG is taxed or not?
Anyway, the storm in the teacup has ended – the CAG is out of reach for the Service Tax officers.
Circular No. ; Dated June 19, 2012