We are thrilled to announce that our partner, CA Shivendu Agarwal, has been awarded two prizes, firstly Shri P.N. Shah, Past President Silver Medal for the Best Paper in Direct Tax Laws (Paper-7) and Late Shri M.S. Choudhari Prize for the Best Paper in Direct Tax Laws (Paper-7) for his outstanding performance in the CA Final Direct Taxes Paper in the November 2021 attempt. His commendable achievement showcases his hard work, dedication, and expertise in the field of taxation.
The CA Final exams are known for their rigorous testing of candidates’ knowledge and understanding of various accounting and taxation principles. Therefore, it is a remarkable feat for CA Shivendu to receive such recognition for his exceptional performance in the Direct Taxes Paper.
Shivendu’s success is a testament to his unwavering commitment to his profession, and his ability to provide valuable insights and solutions to his clients’ complex tax-related problems. His in-depth knowledge of tax laws and regulations has enabled him to offer strategic tax planning and compliance services to clients across various industries.
As a partner of our firm, Shivendu’s expertise and dedication have played a crucial role in helping our clients navigate the ever-evolving tax landscape. His recognition as a top performer in the Direct Taxes Paper reinforces our confidence in his capabilities and reinforces our commitment to providing the best possible services to our clients.
We congratulate Shivendu on his impressive achievement and look forward to his continued success and contributions to the field of taxation. His award is a testament to his hard work, commitment, and expertise, and we are proud to have him as a partner in our firm.
The dictator-esque manner in which these innocent CAs were arrested, give GST (Good and Simple Tax) a draconian color in the eyes if the general public
In the administration of taxation, the provisions for arrests are created to tackle certain situations raised by some unscrupulous tax evaders. Arrest provisions may appear to be very harsh but these are necessary for efficient tax administration and also act as a deterrent and instill a sense of discipline. The provisions for arrests under GST Law have sufficient inbuilt safeguards to ensure that these are used only under authorization from the Commissioner. Besides this, the GST Law also stipulates that arrests can be made only in those cases where the person is involved in offences specified for the purposes of arrest and the tax amount involved in such offence is more than the specified limit.
In this regard, Section 69(1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) reads as under:
“69. Power to arrest.
(1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.”
Relevant portion of Section 132 of the CGST Act is reproduced below:
“132. Punishment for certain offences.
(1) [Whoever commits, or causes to commit and retain the benefits arising out of][1], any of the following offences, namely:-
(a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;
(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
(c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;
(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
shall be punishable––
(i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine;
(ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine;
(2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.
(3) The imprisonment referred to in clauses (i), (ii) and (iii) of sub-section (1) and sub-section (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, (2 of 1974) all offences under this Act, except the offences referred to in sub-section (5) shall be non-cognizable and bailable.
(5) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) and punishable under clause (i) of that sub-section shall be cognizable and non-bailable.”
From a co-joint reading of the above provisions, as per Section 69 of the CGST Act, the power to arrest can only be invoked when the Commissioner having reason to believe on the basis of concrete or credentials evidence or documents and a person has committed specified offence, however, Section 132 of the CGST Act does not use the term ‘reason to believe’ and it says whoever commits or causes to commit and retains benefit from specified offences.
Thus, for arresting a CA who has simply filed GST return for a professional fee, two conditions must be met for prosecution under Section 132:
Causes to commit and
Retaining benefit
In our considered view, it cannot be said that the CA has committed an offence and professional fee cannot be said as retaining the benefit. If Section 69 wanted to arrest such tax professionals, then it should also have used the term ‘causes to commit and retains the benefit of’. Therefore, if the Commissioner wants to arrest such professionals then he has to establish that he has committed a specified offence and retained benefit which can be only established by issuance of a show cause notice and then order being passed under Section 74 of the CGST Act. At most such offence can be a bailable offence under Section 132(4) of the CGST Act.
GST Law must envisage usage of settled Law Jurisprudence by the Hon’ble SC:
SC directed for installation of CCTV Systems at investigation agencies offices and police stations
Directed for formation of State Level Oversight Committee (SLOC) and District\ Level Oversight Committee (DLOC) for purchase distribution and installation of CCTV at police stations and ensure proper working of the same. Further, directed central government to ensure that ensure that such CCTV cameras are installed at all offices of central government agencies, also where interrogation of persons takes place. This includes offices of the CBI, NIA, ED, NCB, DRI, and SFIO, etc. Stated that the Court could then summon the CCTV camera footage concerning the incident for its safekeeping. This footage may then be made available to an investigation agency to process further the complaint made to it- Hon’ble SC inParamvir Singh Saini v. Baljit Singh & Others [Special Leave Petition (Criminal) No. 3543 of 2020 dated December 02, 2020]
Guidelines required to be followed while making arrests
In a landmark judgment in the case of D.K. Basu v. State of West Bengal reported in [1997 (1) SCC 416], the Hon’ble SC has laid down specific guidelines required to be followed while making arrests. While this is in relation to police, it needs to be followed by all departments having power of arrest. These are as under:
(a) The police personnel carrying out the arrest and handling the interrogation of the arrestee should bear accurate, visible and clear identification and name tags with their designations. The particulars of all such police personnel who handle interrogation of the arrestee must be recorded in a register.
(b) The police officer carrying out the arrest shall prepare a memo of arrest at the time of arrest and such memo shall be attested by at least one witness, who may be either a member of the family of the arrestee or a respectable person of the locality from where the arrest is made. It shall also be counter signed by the arrestee and shall contain the time and date of arrest.
(c) A person who has been arrested or detained and is being held in custody in a police station or interrogation center or other lock up, shall be entitled to have one friend or relative or other person known to him or having interest in his welfare being informed, as soon as practicable, that he has been arrested and is being detained at the particular place, unless the attesting witness of the memo of arrest is himself such a friend or a relative of the arrestee.
(d) The time, place of arrest and venue of custody of an arrestee must be notified by the police where the next friend or relative of the arrestee lives outside the district or town through the Legal Aid Organization in the District and the police station of the area concerned telegraphically within a period of 8 to 12 hours after the arrest.
(e) An entry must be made in the diary at the place of detention regarding the arrest of the person which shall also disclose the name of the next friend of the person whohas been informed of the arrest and the names and particulars of the police officials in whose custody the arrestee is.
(f) The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor injuries, if any present on his/her body, must be recorded at that time. The ‘Inspection Memo’ must be signed both by the arrestee and the police officer effecting the arrest and its copy provided to the arrestee.
(g) The arrestee should be subjected to medical examination by the trained doctor every 48 hours during his detention in custody by a doctor on the panel of approved doctors appointed by Director, Health Services of the concerned State or Union Territory, Director, Health Services should prepare such a panel for all Tehsils and Districts as well.
(h) Copies of all the documents including the memo of arrest, referred to above, should be sent to the Magistrate for his record.
(i) The arrestee may be permitted to meet his lawyer during interrogation, though not throughout the interrogation.
(j) A police control room should be provided at all district and State headquarters where information regarding the arrest and the place of custody of the arrestee shall be communicated by the officer causing the arrest, within 12 hours of effecting the arrest and at the police control room it should be displayed on a conspicuous notice board.
[1] Substituted vide Finance Act, 2020 dated March 27, 2020 w.e.f. January 01, 2021 before it was read as “Whoever commits any of the following offences”
Therefore, in our opinion and as per the relevant provisions of law, there are no grounds under which these innocent and young Chartered Accountants may be arrested. Moreover, the process which was followed by the CGST Department, have abused the due process of law and overridden the guidelines issued by the Hon’ble Apex Court as well. As a result, there is need to streamline these provisions in line with arrest and prosecution provisions under the Income Tax Law which have been overhauled recently.
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Lok Sabha on Wednesday approved a bill to revamp the functioning of the Institute of Chartered Accountants of India (ICAI), Institute of Cost Accountants of India and Institute of Company Secretaries of India, with Union minister Nirmala Sitharaman asserting that the changes will not impact the autonomy of these bodies.
The Chartered Accountants, Cost and Works Accountants and Company Secretaries (Amendment) Bill seeks to appoint non-Chartered Accountant (CA), non-cost accountant and non-company secretary as the presiding officer of the disciplinary committees of the respective institutes.
Piloting the bill, Finance and Corporate Affairs Minister Nirmala Sitharaman said the amendments will not infringe upon the autonomy of the three institutes. Instead, it will enhance the quality of audit and improve the country’s investment climate, she added.
The amendments, she said, “will make the institutes more responsible and accountable” and encourage them to adopt global best practices. All stakeholders should have greater confidence of audit statements”.
The bill, which amends the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959, and the Company Secretaries Act, 1980, was later passed by the Lower House after rejecting the amendments moved by the opposition members.
Among other things, the bill provides for setting up of a coordination committee headed by the Secretary of the Ministry of Corporate Affairs. It will have representations from the three institutes.
The minister said that earlier, the three institutes had signed an MoU to set up a coordination committee but the proposal could not take off.
The committee would help in managing the resources of the institutes, she said, adding that IIMs and IITs too have coordination committees.
The bill also provides for registration of firms with the institutes and it will help in paving the way for Indian accountancy firms to grow big, she said.
It also proposes to enhance the quantum of fines for partners and firms found guilty of misconduct.
Responding to criticism that the amendments would dilute the autonomy of the institutes, the FM said, “There is no proposal or intention to impinge upon the autonomy of the three institutes. They will continue to perform their functions.”
Participating in the debate, Congress leader Adhir Ranjan Chowdhury said that while the minister referred to the US, UK, South Africa in her reply, the bill failed to abide by their best practices.
“Through this bill, the government is making a subtle and deliberate attempt to consolidate power and to snatch away the independence of institutions by dismantling the autonomous framework of the concerned institutions,” he said
NCP leader Supriya Sule said that her main concern was about the autonomy of the three reputed institutes.
“You gave the examples of IITs and IIMs. But these institutes are funded by the government while these professional institutes are not. How can they be compared? Doesn’t this take away the autonomy of these institutions?,” she asked.
RSP’s N K Premachandran also raised the issue of autonomy of these institutions.
Author Comments: This step of regularizing the disciplinary procedures for members of these institutes is a slap on the face of these institutes and raises a question mark on the integrity and honesty of these hard working professionals. This step is outrageous and is an attempt to subjugate the autonomy of these reputed institutes which have been the torch-bearers of true and fair financial reporting in the country. Mistakes do happen sometimes since these members are human after all, however, more often than not, the mistakes made by these institutes and their members are nothing compared to the “Human Errors” made by the people in sitting in power trying to monitor them, when those who are trying to monitor these institutes have been involved in “Making Mistakes” themselves. It is to be seen what the long term implications will be. Lets hope that status quo is maintained in this matter and no action is taken which may infringe upon the powers of these esteemed institutes.
