Service Tax - No Audit by Department or CAG - Review the Cadre Review - No need for Audit Commissionerates

As the discussion is about audit,it is proper to highlight about illegal preaudit of central excise refund claims. Their Lordships of the Supreme Court observed in Orient Paper Mills Ltd. v. Union of India that the assessing authorities as well as the appellate authorities are judges in their own cause, yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. Then it is a misnomer to call their orders as their judgments, they would essentially be the judgments of the authority that gave the directions and which authority had given those judgments without hearing the aggrieved party.In a similar case in Rewa Gases Pvt.Ltd. 2002 the Madhya Pradesh High Court has observed that it is not in dispute that the proceedings before the Assistant Collector for adjudicating the claim for refund of excise duty are of quasi judicial nature. He must act independently and impartially. The procedure of pre audit of such a judicial discretion is unbeard of. It amounts to pulling the strings from the backdoor and renders the adjudicating officer as a puppet in the hands of others.and if his quasi judicial discretion is controlled by laying down the procedure of preaudit, justice to the assessee would be a casualty. The Collector (Internal Audit) has no jurisdiction or authority to direct an officer to exercise his discretion in a particular way. There cannot be any preaudit of the refund order passed by the Assistant Collector. These are observations of Bombay high court in bombay chemicals vs uoi.
What happened next..
The board issued a circular in 2007 ,to dispense away of preaudit by commissioner as it amounts to issuing instructions.But, still continued the pre audit cell in its own wisdom for having uniform practice, under asst.commissioner , audit cell, hedqauarters of concerned commissioner. When the court criticized instructions of a superior authority as it amounts to interference of quasijudicial functions of refund sanctioning authority, how can a junior level officer,such as asst.comissioner can issue directions. What cannot be done directly cannot be done indirectly.
Now, the moot question is will it not amount to contempt of court by the board, for the same thing to continue even after above said court orders. These orders are binding on board.By allowing such a practice of pre audit of refund claims the board is continuing the confusion and anarchy. This back seat driving better be stopped and preaudit of refund claims should be stopped immediately.

s prasad 07/08/2014