Transcript of CA. ABHAY DESAI Managing Partner, Yagnesh Desai & Co. VAT AUDIT PRACTICAL ASPECTS.
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- CA. ABHAY DESAI Managing Partner, Yagnesh Desai & Co. VAT
AUDIT PRACTICAL ASPECTS
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- AGENDA CA. Abhay Desai 2 WHY AUDIT CAN WE BE TRUSTED WHO IS TO
BE AUDITED WHO CAN DO THE AUDIT TIME WITHIN WHICH REPORT IS TO BE
MADE TIME WITHIN WHICH REPORT IS TO BE FILED AUDIT REPORT LIVE CASE
PENALTY FOR NON-FILING ISSUES
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- WHY AUDIT CA. Abhay Desai 3 Para 2.12 of WHITE PAPER ON VAT
System of Self- assessment No longer compulsory assessment of all
the dealers It is not a formality Trust reposed in us has to be
reciprocated It takes 20 years to build a reputation and five
minutes to ruin it. It you think about that, youll do things
differently - Warren Buffett
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- CAN WE BE TRUSTED Held, dismissing the petition, that the
chartered accountants by reason of their training had special
aptitude in the matter of audit. A tax practitioner did not have
the same expertise as the chartered accountant in the matter of
accounts. They constituted two different class having nexus with
the object of the provisions which was prevention of evasion of tax
dues. Therefore the amendment requiring chartered accountant to
certify statements thereby disabling legal and tax practitioners
from submitting any statement and prescription of form 41A for
audit report were valid. [Kar Salahakar Sangh ([2013] 60 VST 126
(MP))] 4 CA. Abhay Desai
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- SEC. 63 If in respect of any particular year, total turnover of
a dealer exceeds such amount, not being less than one crore, as may
be prescribed, then such dealer shall get his accounts verified and
audited by a specified authority within nine months from the end of
that year and obtain within that period a report of such audit in
the prescribed form duly signed and verified by such specified
authority along with such particulars as may be prescribed. A true
copy of such report shall be furnished by such dealer to the
Commissioner within such period as may be prescribed. 5 CA. Abhay
Desai
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- WHO IS TO BE AUDITED Every registered dealer whose total
turnover in respect of any particular year exceeds rupees one crore
AND taxable turnover exceeds rupees twenty lacs shall get his
accounts verified and audited by a specified authority.(Rule 44(3))
6 CA. Abhay Desai
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- TOTAL TURNOVER Sec. 2(34) total turnover means aggregate of the
following transactions effected by a dealer: (a)turnover of sales
or purchases of goods within the State whether such sales or
purchases of goods are taxable or exempt under this Act;
(b)turnover of sales of goods in the course of inter-State trade or
commerce; (c)turnover of sales of goods in the course of export of
goods out of the territory of India; (d)turnover of sales by a
dealer on his own account and also on behalf of his principal. 7
CA. Abhay Desai
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- TAXABLE TURNOVER Sec. 2(30)taxable turnover means the turnover
of all sales or purchases of a dealer during the prescribed period
in any year, which remains after deducting therefrom,- (a)the
turnover of sales not subject to tax under this Act; (b)the
turnover of goods declared exempt under sub-section (1) of section
5 or under a notification under sub-section (2) of section 5, and
(c)in case of turnover of sales in relation to works contract, the
charges towards labour, service and other like charges, and subject
to such conditions as may be prescribed: Provided that in the cases
where the amount of charges towards labour, service and other like
charges in such contract are not ascertainable from the terms and
conditions of the contract, the amount of such charges shall be
calculated in such manner as may be prescribed; 8 CA. Abhay
Desai
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- WHO CAN DO THE AUDIT a Chartered Accountant a Cost Accountant a
Legal practitioner or a Sales Tax Practitioner 9 CA. Abhay
Desai
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- TIME WITHIN WHICH REPORT IS TO BE MADE CA. Abhay Desai 10 Nine
months from end of the year (Sec.63) Due date for annual return in
audit cases Nine months (Rule 20) Revised return to be filed in
case of differences
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- TIME LIMIT WITHIN WHICH REPORT IS TO BE SUBMITTED Shall within
a period of thirty days from the date of obtaining such report,
submit true copy of such report (Rule 44(2)) 11 CA. Abhay
Desai
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- AUDIT REPORT (Rule 44) Shall be in Form 217 and shall contain
following particulars, namely:- (a)verification of accounts and
documents as mentioned in rule 45, (b)certificate containing a
report as to - (i)correctness of the tax credits claimed by the
dealer during the period under report, and (ii)whether the dealer
has employed fair and reasonable method as required under
sub-section (11) of section 11 of the Act; (c)whether the dealer
has made the true and proper calculation and payment of tax as
required under the Act. 12 CA. Abhay Desai
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- FORM 217 Clause 1: Correctness & Completeness of annual
return Clause 2: Documents relied upon Clause 3: Major changes
Clause 4: Summary Clause 5: Advise 13 CA. Abhay Desai
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- ENCLOSURES 1)Statutory Audit Report with Profit and Loss
Account and balance sheet. 2)Statement of particulars. 3)Statement
of other particulars as decided by the Commissioner through public
circular. 14 CA. Abhay Desai
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- STATEMENT OF PARTICULARS Part A FOR TRADERS ENGAGED IN LOCAL
SALES & PURCHASES ONLY Part B - FOR TRADERS HOLDING VAT &
CST REGISTRATION Part C - FOR DEALERS OTHER THAN COVERED UNDER
STATEMENT OF PARTICULARS A & B 15 CA. Abhay Desai
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- SUB-PARTS PART I - GENERAL INFORMATION PART II MANUFACTURING
ACTIVITY RESULT PART III - TRADING ACTIVITY RESULT PART IV OTHER
STATEMENTS PART V FINANCIAL RESULT 16 CA. Abhay Desai
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- ANNEXURES 1. Separate statement of month-wise payments with
details of challan is submitted. 2. Separate Quantitative
particulars of principle items is submitted. 2. Separate list of
Statutory Forms obtained from the Commercial Tax Office with serial
no. (Form C, E-I, E-II, F, H, I, J and others if any) is submitted.
3. Separate list of statutory forms issued by the dealer during the
year (Form C, E-I, E-II, F, H, I, J and others if any) is
submitted. 4. Separate list of Statutory Forms received on the
Sales of goods under Gujarat Value Added Tax Act, 2003 as well as
under Central Sales Tax Act, 1956 is submitted. 5. Observations
about delay in filing returns, delay in payment of tax or
non-payment or short payment of tax (if any) 6. Separate list of
mentioning commodity wise turnover of sales and purchase, tax rate
and tax involved of top 10 commodities. 17 CA. Abhay Desai
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- ACKNOWLEDGMENT Audit report as received above is submitted as
per requirement of S. 63 of Gujarat VAT Act, 2003. ACKNOWLEDGMENT
BY DEPARTMENT 18 CA. Abhay Desai
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- EXAMPLE LIVE CASE 19 CA. Abhay Desai
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- INDICATIVE LIST OF DOCUMENTS CA. Abhay Desai 20 1. Sales Ledger
with rate wise bifurcation reconciled with yearly summary of
returns 2. Purchase Ledger with consolidated 201B for entire year
reconciled with yearly summary of returns 3. Copy of sales invoices
4. Copy of purchase invoices 5. Statement of direct exports along
with relevant proofs. 6.Statement of capital goods on which ITC has
been claimed reconciled with additions to fixed assets in Balance
Sheet 7. Reconciliation of VAT & CST Account
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- INDICATIVE LIST OF DOCUMENTS CA. Abhay Desai 21 8.
Reconciliation of C / H / F forms received & to be received
with OGS Sales, indirect export & branch transfers resp. 9.
Statement of purchases against form H with its referable direct
exports and relevant evidence 10. Statement of Highseas sales along
with its referable import purchase 11.Details of opening and
closing stock 12. Statement of sales return (VAT & CST) -
within six months and beyond six months 13. Copy of audited
accounts 14.TRIAL BALANCE of Gujarat location as on 31st March 13
(Certified by mgmt).
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- ISSUES PENALTYREVISIONOTHERS 22 CA. Abhay Desai
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- PENALTY Not exceeding rupees ten thousand (Sec. 63(2))
Reasonable opportunity of being heard Incomplete audit report ??
Fails to furnish a true copy of such report Notice in Form 309 is
mandatory (Rule 46(1)) 23 CA. Abhay Desai
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- DISCRETION TO IMPOSE PENALTY FOR LATE FILING OF REPORT Ankit
International [2011] 46 VST 1 (Bom) Nitco Paints Ltd. [2011] 42 VST
71 (Bom) 24 CA. Abhay Desai
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- FAILURE TO SUBMIT IN PRESCRIBED FORM Tax not found payable on
assessment Birla Corporation Ltd [2009] 26 VST 471 (Pat) 25 CA.
Abhay Desai
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- PENALTY FOR NON-SUBMISSION CONFIRMED Dhruv Automobiles (SA NO
794 OF 2011) 26 CA. Abhay Desai
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- REVISION Only returns can be revised (Sec. 29(4)) Annual return
can be revised to make corrections as advised by VAT Auditor No
provision for filing revised VAT Audit Report 27 CA. Abhay
Desai
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- THREE AUDIT REPORTS ASSESSMENT BASED ON TRUE FACTS Shree
Krishna Vijay Petroleum (2013-GSTB-I-98) 28 CA. Abhay Desai
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- OTHERS 29 CA. Abhay Desai
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- NO PENALTY IF TAX PAID AFTER INTERNAL AUDIT BUT BEFORE
ASSESSMENT Delay not attributable to DELIBERATE, WILFUL OR
CONTUMACIOUS CONDUCT Food Corporation of India 45 VST 9 (Pat)
Narendra Machinery Works Private Limited (2010 GSTB Part-I) 30 CA.
Abhay Desai
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- STATUTORY AUDIT REPORT AUTHENTIC Classic Marbles [2009] 25 VST
295 (Ker) 31 CA. Abhay Desai
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- MISTAKE IN AUDIT REPORT Labour charges shown as purchase
Clarification given by CA Adroit engg. services (SA NO 80 OF 2012)
32 CA. Abhay Desai
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- DEALER NOT TO SUFFER FOR FAULT OF CONSULTANT Return not filed
by consultant Mayur Construction (SA NO 964 OF 2009) 33 CA. Abhay
Desai
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- SUMMARY CA. Abhay Desai 34 WHY AUDIT ? CAN WE BE TRUSTED ? WHO
IS TO BE AUDITED ? WHO CAN AUDIT ? TIME WITHIN WHICH REPORT IS TO
BE MADE ? TIME WITHIN WHICH REPORT IS TO BE FILED ? AUDIT REPORT
LIVE CASE PENALTY FOR NOT-FILING ISSUES
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- WE CAN DO IT !! The AS are very complex and there are major
variances in respect of turnover of sales and purchases accounted
as per AAS in the profit and loss account of the enterprise and
turnover of sales and purchases which is required to be considered
for the purpose of levy of tax under the Maharashtra Value Added
Tax Act, 2002. Clear cut comments on the major changes made by any
firm in a given period in respect of accounting system, method of
valuation of stocks and business model, etc., are required from the
auditor. These are complex accounting and audit issues which
advocates, sales tax practitioners and company secretaries are not
professionally qualified to handle. Sales Tax Practitioners'
Association of Maharashtra and another (2008) 14 VST 69 (Bom) 35
CA. Abhay Desai
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