Mvat
Students
(Querist) 24 July 2013
This query is : Resolved
What are the Liabities of an MVAT Auditor who along with the Trader indulges in Evasion of MVAT Tax (by Certifiying Audit report in Form 704 knowing that there is tax Evasion i.e paying only 1 % instead of 12.5%) and charges Premium Fees for Signing the Bogus MVAT Audit Report. this is not an Academic query
Anirudh
(Expert) 03 October 2013
In my view, the Auditor is not responsible at all for the following reasons:
(1) as per para 2 of the certification, "maintenance of books of accounts, sales tax related records and financial statements are the responsibility of the Entity's Management."
(2) Based on such books of accounts, the Auditor certifies, by stating in para (B)(g) "considering the schedule and entry wise classification of goods sold, the rate of tax applied is correct..."
If the classification itself has been made wrong by the Management, the Auditor is not responsible. The Auditor has to check whether the rate applied is correct with reference to the classification of goods made by the Management.
If according to the classification made (whether the classification itself is right or wrong is not the question, it is the responsibility of the Management), if rate applicable is 12.5%, but only 1% is charged then and then alone the Certificate given by the CA will be wrong and he will be taken to task. If, the rate of VAT applicable is 1% as per the classification done by the Management, and if 1% had been charged, then the Auditor cannot be held responsible.
