VAT – AUDIT
The last date of VAT Audit of 2005-06 will again be extended.
This editorial is being written on 19th August, 2007 and the directions for
extension are likely to be given on 21st August, 2007, since the matter is kept
for hearing on that day. Despite this, today, on 19th August we can confidently
inform everyone concerned that the date will be extended, may be by four weeks.
Though, the initial extension would be of four weeks, we are
afraid the same would extend beyond Diwali, unless the Court continuously hears
the matter. The case was originally heard by Hon'ble Dr. Justice Radhakrishnan
and Hon'ble Justice Daga, but both of them were transferred to the different
benches. The Government moved the Chief Justice for reconstitution of the bench
with these judges but did not pursue the same. Now, both of them have expressed
their inability to spare even a single day since they are overburdended with
other matters. Resultantly, the case will again come up for hearing before
Hon'ble Justice Rebello and another and they will have to hear the matter de
novo. Meanwhile, it is learnt that the Small Scale Industries‘ Association
has filed Writ for elimination of the provision for audit altogether and other
Trade Associations from different parts of the State are in the process of
intervening.
What would be the fate of audit of 2006-07? The bureaucracy
has become vindictive and they have removed the upper limit of penalty of Rupees
one lakh. The legislators have also, without applying their mind, conceded to
this amendment. No enabling provision is made for extension of date by the
Commissioner. The previous Commissioner used to assume the powers delegated to
the Government and extend the date by issuing circular. Let us see what the
present Commissioner would do. But one thing is sure that this unreasonable
amendment is going to be challenged and it may further disrupt the working of
the Department.
The wise step would be to take up the assessments of 2005-06
at the earliest. It is in the interest of the revenue. The Commissioner may
ignore our suggestions thinking the same coming from interested persons. But the
fact remains that majority of audit reports have been signed by the Chartered
Accountants who do not know abcd of Sales Tax law. The CAs who do co-operative
Societies and bank audits, those are available at much cheaper rate. The
tax-payer is overburdened by the audit provisions which are there almost under
every revenue enactment. He opts for such auditors. The CAs who meet the
Commissioner and who are well versed with Sales Tax Provisions are few in
numbers. How many audit each one of them can undertake. If those are that
capable, then where was the necessity of keeping a restriction of maximum 35
audits per CA under the Income-tax Act and similar restriction under the Company
Law? It is learnt that the Commissioner himself in the meeting with the large
tax-payers has informed that only 20 per cent of the audit reports of 2005-06
have been received till date. Some reports might have been withheld for non
receipt of declarations, but in most cases the same have not been filed being
incomplete. The persons who are well conversant with the Sales Tax assessments
can only file correct, complete and self consistent Form No.704 since it is
nothing but the self assessment. The Government of Andhra Pradesh must have
realized this position and has therefore permitted every tax practitioner to do
the audit.
May we expect Hon'ble Commissioner to have a second thought?
