JUDICIARY ON GST AUDIT

Indian Oil Corporation Ltd. and others Vs. State of Assam and others [2002] 128 STC 0537 Gauhati High Court

Section 10A of Assam General Sales Tax Act, 1993

“Audit of Accounts of certain dealers

Every dealer whose gross turnover in a year exceeds rupees forty lakhs, shall get his accounts audited by a Chartered Accountant and shall submit a copy of the audited statement of account and certificate in such manner as may be prescribed.”

Rule 19A of Assam General Sales Tax Rules, 1993

The Certificate of audit of the accounts of a dealer required to be furnished under section 10A shall be in Form XXXI accompanied by a statement of particulars in Form XXXI-A and shall be furnished to the Assessing Officer on or before the 31st October of the year succeeding the year to which it relates.

In this batch of writ petitions, petitioners challenged the validity and legality of the provisions of section 10A of the Assam General Sales Tax Act, 1993, and provisions of rule 19A of the Assam General Sales Tax Rules, 1993, which were incorporated by the amending Act of 1999 and made applicable with effect from June 1, 1999.

Gauhati High Court stated that the provisions of Act can’ be quashed on the ground that they were incorporated only at the request of a particular group, association or organization unless these were beyond the competence of the Legislature or ultra vires in view of the provisions of the Constitution of India

It also stated that section 11 of the Assam General Sales Tax Act, 1993 provides for compulsory registration of dealers who are liable to pay tax. However, this does not mean that the dealers who are not liable to pay tax under the Act are not required to register. Thus, it cannot be said that the provisions of the Act are limited or covers the dealers who are liable to pay tax only and the requirement of compulsory audit under section 10A of the Act on the basis of gross turnover is alien to the provisions of the Act. The submission has got no basis.

Gauhati High Court held that “15. On perusal of the above, it may be seen that the dealer who is covered by section 10A of the Act will also stand covered under section 44AB (b) of the Act. The submission on behalf of the petitioner therefore is that in the Act there is no provisions similar to proviso (ii) of section 44AB as quoted, as a result of which, an extra burden has been imposed on the dealer to get their accounts audited twice, one for the purpose of Income-tax Act and the other for the purpose of Sales Tax Act. I find sufficient force in the above submission as the proviso (ii) of the Income-tax Act provided that if the accounts are already audited under any other provisions of law, no separate audit under section 44AB(a), (b) is required. The basic idea is that two separate audits will not serve any purpose, at best, the same auditors may be asked to provide further information as per rule 19A if required by the sales tax department. The provision of section 10A is also required to be modified to that extent so that the dealers are not, burdened unnecessarily. However, we do not propose to strike the provisions but read down the same by providing that an audit made by the concerned auditor under the Income-tax Act shall be deemed to be sufficient compliance under the provisions of section 10A of the Act provided a further report in forms XXXI and XXXI-A as required under rule 19A is furnished along with the said audit report.

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17. Dr. Saraf has further submitted that in absence of any similar or identical provisions under the Act, the authorities are unable to take any action against the dealers who refuse or fail to submit the returns as the assessing authority is bound to make assessment with or without the audit report and in that sense the provisions of section 10A of the Act have become optional, that is, at the discretion of the dealers. The respondent-authority must examine this aspect of the matter and take necessary action. However, the question before this Court is whether in absence of any penal provision, the section 10A and rule 19A can be quashed. In our opinion, the impugned provision cannot be thrown out on that count.
18. In the result, the writ petition stands disposed as stated above.”

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