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TMI BlogSPECIAL AUDIT UNDER DELHI VALUE ADDED TAX ACT, 2004 – WHETHER SHOW CAUSE NOTICE IS TO BE ISSUED?X X X X Extracts X X X X X X X X Extracts X X X X ..... SPECIAL AUDIT UNDER DELHI VALUE ADDED TAX ACT, 2004 – WHETHER SHOW CAUSE NOTICE IS TO BE ISSUED? - By: - Mr. M. GOVINDARAJAN - Value Added Tax - VAT and CST - Dated:- 14-11-2014 - - Section 58A of the Delhi Value Added Tax Act, 2004 ( Act for short) deals with special audit. According to this section 58A (1) , if the Commissioner, having regard to- the nature and complexity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of a dealer; or the interest of the revenue; or volume of accounts; or doubts about the correctness of the accounts; or multiplicity of transactions in the accounts; or specialized nature of business activity; or non-production of all records and accounts; or non-filing of audit report under section 49 of this Act ; or any other reason. is of the opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that it is necessary so to do, he may direct the dealer by a notice in writing to get his records including books of accounts, examined and audited by an accountant or a panel of accountants or any other professional or panel of professionals nominated by the Commissioner in this behalf and to furnish a report of such examination and audit in the format that he may specify, duly signed and veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by such accountant or panel of accountants or professional or panel of professionals and setting forth such particulars as may he specified. The provisions of Section 58A (1) shall have effect notwithstanding that the accounts of the dealer have been audited under any other provision of this Act or any other law for the time being in force or otherwise. Every report shall be furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealer to the Commissioner within such period as may be specified by the Commissioner. the Commissioner may, on an application made in this behalf by the dealer and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit. the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hundred eighty days from the date on which the direction under sub-section (1) is received by the dealer. The expenses of, and incidental to, the examination and audit of records under sub-section (1), (including the remuneration of the accountant or a penal of accountants or professional or panel of professionals) shall be determined and paid by the Commissioner and that determination shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be final. The issue to be discussed in this article is whether show cause notice is required to be issued to the assessee before ordering for special audit with reference to decided case law. In Larsen Toubro Limited V. Commissioner of Value Added Tax 2014 (2) TMI 1004 - DELHI HIGH COURT the writ petitioners challenged the two orders of Commissioner proposing to conduct special au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit under Section 58A of the Act for the years 2011-12 and 2012 13. The petitioner contended as below: the special audit was not preceded by any show cause notice eliciting the views and representation to the proposal for the special audit; the order straightaway made under Section 58A clearly has adverse civil consequences; before making such order for special audit the VAT C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner was under an obligation to issue minimum notice and grant adequate time to make representations. The petitioner relied on the judgment of the Supreme Court in Rajesh Kumar V. Deputy Commissioner of Income Tax 2006 (11) TMI 135 - SUPREME Court . The Revenue contended as below: Section 58A was amended on 16.01.2013 by the Delhi Act No. 14/2012; The opening phras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eology in Section 58A(1) as it stood before the amendment was if, at any stage of the proceeding under this Act which was deleted by the amendment; It enlarges the powers of the VAT Commissioner to propose special audit even before initiation of proceedings; If the legislature had intended that the concerned assessee had to be issued show cause notice prior to special audit, it would hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so provided by a suitable amendment; The language used under Section 58A differs from that in Section 142(2A) of the Income Tax Act in which a proviso was inserted after the judgment of the Supreme Court; The High Court went through the judgment of the Supreme Court relied on by the assessee. In this case the Supreme Court spelt out the requirements to give adequat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opportunity in the context of proposal under Section 142(2A) of the Income Tax Act . The Parliament assimilated the law and codified it through a proviso that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard. In the present case, given the pari materia terms both provisions, the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court ruled that an identical opportunity in the case of special audit in the income tax is necessary to be given through notice by the Commissioner on each occasion when special audit is proposed. The High Court quashed the order of Commissioner. The High Court further held that is open to the Department to issue show cause notice and grant reasonable opportunity in line with the Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t s decision in Rajesh Kumar (supra). - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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