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VAT Audit Case — Dismissal of
SLP by Supreme Court cannot be ‘The End’
In the last month, we had
stated that our Non C.A. members are shocked as well as depressed because of the
Bombay High Court judgment. On 13th May we got one more shock because of
dismissal of our SLP by the Supreme Court of India. Our SLP was filed on 5th May
and the SLP of the Bar Council of Maharashtra & Goa was filed on 10th May. Prior
thereto one more SLP was filed by another Association namely The Maharashtra
State Tax Practitioner Associations’ Federation. Our counsel Mr. Mukul Rohatgi
could not reach the Court when the matter was called and, therefore, the senior
counsel Mr. Uday Lalit and Mr. Diwan appeared respectively for Bar Council and
another Association.
The aforesaid dismissal, only
after two minutes’ hearing, may raise a question, whether our main point that
the term ‘audit of accounts’ used in section 61 is a misnomer and, therefore,
the judgments on section 44AB of the Income Tax Act are not applicable to our
case is not correct according to Supreme Court ? While writing this
communication, a copy of the judgment is not available with us, however, the
observation of the Hon’ble judges in the open Court makes it clear why they did
not touch our main point.
The observation of the Court
was more or less like this. “Whether the impugned amendment was necessary or
warranted is in the exclusive domain of the rule-making authority and,
therefore, it is not for the Court to question the wisdom of the rule-making
authority on consideration of necessity and warrant”.
Because of the aforesaid view
of the Supreme Court, the SLP was dismissed within no time. When the counsels
further tried to convince the Court, it suggested repeatedly to approach the
Ministers who frame the policies and not the Court. The Court was referring to
earlier judgments of High Courts and of Supreme Court on the issue and more
specifically to the judgment in the case of Andhra Sales Tax Practitioners &
Consultants’ Association and others reported in 127 STC 177. This took us to go
back to the aforesaid judgment once again to study the circumstances then
prevailing for the insertion of certification only by Chartered Accountants. The
relevant observations are reproduced below.
“In the instant case, it is not
difficult to find out the rationale of the impugned provision. The cumbersome
procedure of producing bulky books of account before the assessing authority
hitherto in vogue is now done away. The assessing authority now would complete
the assessment quickly and without loss of time on the basis of the
certification of the Chartered Accountant without further scrutiny of accounts.
The object behind this provision it seems to our mind, is that the Chartered
Accountants are highly qualified in accountancy and allied subjects and they are
technically trained also. Be that as it may, it is not for the Court to question
the wisdom of the rule-making authority.”
On this background and so
called rationale behind the certification in Form 704 only by Chartered and Cost
Accountant, we earnestly request the Hon’ble Commissioner of Sales Tax to
reconsider the issue and take lead in amending section 61 as was suggested by
the Sales Tax Department in the month of March 2005, so as to allow the other
professionals also the right to certify Form 704.
As the Supreme Court has
expressed its inability to interfere in the matter, we are left at the mercy of
our legislators. In fact, all of us are well aware that we had approached the
Bombay High Court only after all our representations made before the Hon’ble
Finance Minister of Maharashtra and the then Commissioner of Sales Tax, Mr.
Khatua, failed, with non-convincing reasons put forth by both of them.
On this background, we appeal
to all our members, not to give-up the issue and trust the Association which has
a chequered history of protecting the interest of its members who are working
hard for earning the legitimate revenue for the State. On page 181, we have
printed an open letter, received from our senior member Mr. V. R. Ghelani, which
is self-explanatory. We request members to go through the same.
My tenure will come to an end
on 18th July, 2008. The new President taking the reins of this Association will
have the onerous responsibility of strong representation before all concerned,
so as to convince and if necessary, to compel to accept our legitimate and
rational demand.
At this juncture, we bring to
the kind notice of the Hon’ble Commissioner that in this whole episode of Writ
Petition, many dealers have not yet appointed VAT Auditors because their Sales
Tax matters are being handled for number of years by non-C.A. professionals like
STPs, Advocates, etc. Such dealers will have to find out Auditors who are
conversant with Sales Tax Act and who are ready to accept new clients for VAT
Audit. Such newly appointed Auditors would require sufficient time to cope with
the additional audit work, coming to them in bulk.
Under the circumstance, we
earnestly request the Hon’ble Commissioner to extend the due date for filing
Form 704 for the years 2005-06 & 2006-07 to 30th November 2008, and for the year
2007-08 to 31st March 2009. If the extension to file Form 704 is not granted,
the dealers will become liable to pay penalty equal to one tenth percent of the
total sales. We assure that no extension of due date will be necessary and will
be asked for by us in respect of the year 2009-10. We are sure, that the Hon’ble
Commissioner will consider our request.
Deepak Bapat
President |
