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2021 (4) TMI 318 - SC - Indian LawsValidity of Guidelines issued by the Institute of Chartered Accountants of India (ICAI) - specified number (Cap) of tax audit assignments - Seeking for transfer of several writ petitions pending in the Kerala High Court, Madras High Court and Calcutta High Court - validity of Chapter VI of Guidelines No.1CA(7)/02/2008 dated 08.08.2008 - disposal of writ petition on early date - HELD THAT - The fact that this Court on 03.04.1991 had dismissed the Transfer Petition Nos.614-615 of 1990 observing that the concerned High Courts may dispose of the writ petition on early date cannot be treated any kind of bar in transferring the writ petition in the present batch of cases. At the time when the earlier transfer petition was dismissed, conflicting judgments on subject in issue by different High Courts had not come. Cap on the number of audits - HELD THAT - There are conflicting judgments of different High Courts taking different views on the similar guidelines. Further, transferring the writ petition to one High Court i.e. Calcutta High Court does not preclude the consideration of prayer of the petitioner for transferring the writ petitions to this Court in present matter. The guidelines which are impugned in the High Court and consequent disciplinary proceedings initiated against various chartered accountants throughout the country is an issue of public importance affecting Chartered Accountants as well as the citizens who have to obtain compulsory tax audits. Thus, to settle the law and to clear the uncertainty among tax professionals and citizens, it is appropriate that this Court may transfer the writ petition, to authoritatively pronounce the law on the subject. Transfer Petitions are allowed.
Issues Involved:
1. Validity of Chapter VI of Guidelines No.1CA(7)/02/2008 dated 08.08.2008. 2. Violation of Article 19(1)(g) of the Constitution of India. 3. Transfer of writ petitions from various High Courts to the Supreme Court. 4. Interim orders in favor of writ petitioners. Detailed Analysis: 1. Validity of Chapter VI of Guidelines No.1CA(7)/02/2008 dated 08.08.2008: The writ petitioners challenged the validity of Chapter VI of the Guidelines issued by the Institute of Chartered Accountants of India (ICAI) on 08.08.2008. This chapter stipulates that a member of the Institute in practice shall not accept more than the "specified number of tax audit assignments" in a financial year, which is currently set at 60 under Section 44AB of the Income-tax Act, 1961. Section 22 of the Chartered Accountants Act, 1949 defines "professional or other misconduct" to include acts or omissions provided in any of the Schedules to the Act. Clause (1) of Part II of the Second Schedule to the Act stipulates that a member of the Institute shall be deemed guilty of professional misconduct if he contravenes any provisions of the Act, regulations, or guidelines issued by the Council of the Institute. Hence, contravention of Chapter VI of the Guidelines would result in professional misconduct under the Chartered Accountants Act, 1949. 2. Violation of Article 19(1)(g) of the Constitution of India: The petitioners argued that Chapter VI of the Guidelines is violative of Article 19(1)(g) of the Constitution, which guarantees the right to practice any profession, or to carry on any occupation, trade, or business. The guidelines were seen as imposing unreasonable restrictions by capping the number of tax audit assignments a Chartered Accountant can accept, without considering the nature of the audit, the nature and volume of business of the clients, local conditions, and laws. The guidelines were also challenged on the grounds of being arbitrary and not taking into account the place of practice of each Chartered Accountant. 3. Transfer of writ petitions from various High Courts to the Supreme Court: The ICAI filed transfer petitions under Article 139-A(1) of the Constitution read with Order XL Rule 1 of the Supreme Court Rules, 2013, seeking to transfer several writ petitions pending in the Kerala High Court, Madras High Court, and Calcutta High Court to the Supreme Court. The primary reason was to avoid multiplicity of proceedings, conflict of decisions, and to settle the law comprehensively on a question of law of general public importance. The respondents opposed the transfer, arguing that it would take away the constitutional protection and rights availed by the writ petitioners under Article 226 of the Constitution. They suggested that if necessary, the writ petitions be transferred to one High Court instead of the Supreme Court. 4. Interim orders in favor of writ petitioners: In various writ petitions, interim orders were operating in favor of the writ petitioners, staying the disciplinary proceedings initiated against them for violation of the guidelines dated 08.08.2008. The respondents requested that these interim orders continue if the transfer is allowed. Judgment: The Supreme Court acknowledged the conflicting judgments of different High Courts on the cap on the number of audits and the public importance of the issue affecting Chartered Accountants and citizens requiring compulsory tax audits. The Court decided that it was appropriate to transfer the writ petitions to the Supreme Court to authoritatively pronounce the law on the subject and clear the uncertainty among tax professionals and citizens. The Court allowed the transfer petitions and ordered that the interim orders in favor of the writ petitioners continue until further orders by the Supreme Court. The Registry was directed to transmit the order to the respective High Courts immediately.
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