Power of CAG to call for information for audit :
C&AG can conduct audit of taxable persons also, termed as CERA Audit.
C&AG is an authority appointed under Article 148 of Constitution of India. Article 151 of Constitution specifies that reports of C&AG shall be submitted to President of India, who causes these to be laid before each House of Parliament. CERA audits are conducted as a part of audit of Government accounts. Thus, these audits are conducted under Constitutional authority and are in no way connected or related to internal audits carried out by staff of excise department. Frequency of CERA Audits is as per the importance they attach and availability of time to CERA audit parties.
Assessee is required to produce to audit parties (i) Records (ii) Cost audit report (iii) Income Tax audit report.
Audit paras of C&AG report are sent to department. Instructions for handling these audit paras and sending reports has been specified in MF(DR) Instruction F No. 307/10/2009-FTT dated 23-3-2011 [270 ELT T21]
C&AG empowered to conduct audits of assessees- Under Article 149 of Constitution if India, C&AG is empowered to conduct audits of Government and semi-Government undertakings. The doubt is raised whether C&AG has powers to conduct audit of accounts of assessee.
In Association of Unified Tele Services Providers and Others v. UOI (2014) 6 SCC 110, it has been held that as per sections 13, 16 and 18 of Comptroller and Auditor General’s (duties, Powers and Conditions of Service) Act, 1971, C&AG has powers to audit all transactions and all receipts payable into Consolidated Funds of India. This power takes in not only accounts of Union and the States but all transactions which has nexus with Consolidated Fund of India. – – In this case, it was held that C&AG has powers to call for records from all private licensees of telecom spectrum.
In Infinity Infotech Parks v. UOI (2015) 50 GST 622 = 55 taxmann.com 367 = 85 VST 465 (Cal HC), it has been held that C&AG has no powers to audit accounts of a non-Government company.
In SKP Securities v. Deputy Director (RA-IDT) (2013) 39 STT 327 = 31 taxmann.com 93 = 59 VST 19 = 291 ELT 33 (Cal HC), a view was held that C&AG do not have powers to audit accounts of individual assessees. However, in view of contradictory view, the matter has been referred to larger bench.
In view of decision of Supreme Court in case of telecom service operators, in my view, C&AG can be said to have powers to audit accounts of assessees, as the tax receipts are part of Consolidated Fund of India.