As a part of C.A. fraternity I feel proud and joy wherever the contributions of Chartered Accountants are recognized and appreciated by all sections of our society. The legislators having full faith and trust in the profession of accountancy provided complete autonomy to the profession in India by enacting The Chartered Accountants Act, 1949 on the glorious day of July 1, 1949. In 55 years since then, Chartered Accountants, quite promisingly kept their faith intact and rather strengthened it, gaining full faith and admiration from all corners of our society, the legislatures and the officers through the self -regulatory and self disciplinary framework keeping highest ethical standards. Chartered Accountants are today providing all pervasive business solutions to its esteemed clients. Their services include the expert advisory and operating services like Accountancy services, Taxation planning & advice, Compliance Services, Personal as well as business Tax Returns, VAT, Central Excise, Statutory And Non-Statutory Audits, Advisory services in the field of, setting up in Business, planning for the future, Management Consultancy, and financial planning. The credit of development of ever-evolving profession of Chartered Accountants certainly goes to the society as it is the society which posed ever-increasing professional competence from C.A.s so as to respond to needs of the society ranging from the job of accounting to the role of facilitators for business as a whole. Whenever there has been a point to speak out on the demands of society, The Institute of Chartered Accountants of India has been on the fore-front in presenting the genuine needs of society to the Government may it be in the form of presentation of Pre-Budget Memorandum before every budget or be it a matter of other taxes and policies of the government.

The profession always assumed new roles and responsibilities and proved its worth with due excellence and took initiative for serving the society whenever there has been a call from the society. Once again The Institute of Chartered Accountants of India has been at the forefront as a partner to the Government and the Society in the VAT implementation process. To ease the pain of adoption of new tax regime, The Institute came forward with Guidance Note on Accounting for State Level VAT and this effort has been well acknowledged by our honorable Dr. Asim Dass Gupta, Chairman of Empowered Committee of State Finance Ministers on VAT as he said, “we turned to The Institute of Chartered Accountants of India since it is the only Institute, which is not only the statutory one but the only one of national importance to which we turned for guidelines on accounting”.

The aim of VAT compliance system is to encourage the highest possible level of Voluntary Compliance using the system of Self –Assessment. The intentions of the legislations for introducing Self-Assessment in taxation system for sale of goods is loud and clear, that is to have full reliance on whatever is declared by the taxpayer and to remove place for unwarranted multiple visits of the taxpayer to the offices of worthy officials. The taxpayer is now relieved from compulsorily visiting .the department for having the assessment of his returns. Really it is advantageous to the business community in terms of saving of precious time and efforts in visiting the offices. It is here where the role of a Chartered Accountant assumes importance to the society, the legislators, the officials and the business community. VAT Audit assures the lawmakers that reliance on the system of Self-Assessment has been correctly placed and is well supported by VAT Audit Report. The taxpayer is sure that any mistake or discrepancy that may have erroneously crept in his account books or VAT returns is timely rectified. The taxpayer further is relieved of any apprehended penalty provisions as the scope of penalty in future is well mitigated when everything is set right at the time of auditing the accounts. Suppose there is some inadvertent mistake in the books of accounts of a taxpayer relating to calculation mistake of excess claim of Input Tax Credit. This will be pointed out during VAT Audit and taxpayer is saved of the penalty for wrong claim of ITC, which may otherwise be imposed. The officials find themselves in the gainful position as they can concentrate on locating the cases of tax evasion only rather than paying in terms of their precious time in assessing each and every return. The society at large is assured that the business community is fairly operating and there is no room for matters, which may affect the interests of the society because accounts of business are pre-audited. No short payment of taxes has been made in the exchequer. No excess claims of refund have been made or allowed out of public funds as everything has already been duly certified and audited.

Before I journey further down with my pen, I see the readers may be having in the minds that I am foreseeing things too much positively. Let us start moving down the memory lanes when under the Income Tax Act, 1961 every return of income tax was scrutinized. Change is rule of nature and it came in terms of Self-Assessment in Income Tax too. Income Tax Assessee doesn’t need to go to the Income Tax Department every year to have its income assessed. It was really the far-sightedness of the legislators that they introduced Tax Audit u/s 44AB. Chartered Accountants assumed roles as compliance partners to the taxpayers and assurance partners to the Income Tax Department and are duly complying with their professional responsibilities with due diligence, professional competence and with commitment. Suppose some depreciation has been claimed by the Income Tax Assessee in excess of what is warranted, the same is duly pointed out at the time of Tax Audit and finally additional tax if any is paid as self-assessment tax. No question at all of any demand notice from the department on account of excess depreciation that would have otherwise been issued to the assessing causing him undue hardship on one hand and wasteful expenditure of departmental resources in the matter of less importance. So Tax Audit is now perceived and experienced as an effective tool for taxation.

It is going to give fruitful results in case of VAT Audit too. I may re-iterate here with full satisfaction that via VAT Audit, the benefits as enunciated above will accrue to all corners of our society.

One message is loud and clear that VAT Audit is in the interest of the taxpayer, the department as well as in the interest of the society as a whole. Now some think why it is only Chartered Accountants who may perform VAT Audit and not others. Reasoning is here. Let us have a look upon the professional accountability of a Chartered Accountant as VAT Auditor. Some of these are enunciated here:

1. Certification of True and Fair view of the Account Books
2. Certification of Turnover of Sale and Purchase of the taxpayer.
3. Certification of Correct figures of tax.
4. Certification that proper books of accounts are kept by the business.
5. Certification that correct amount of VAT is paid.
6. Certification that correct amount of Input Tax Credit is claimed.
7. Certification that correct amount of Refund is claimed and received by the business.
8. Certification that correct method of valuation of stocks has been employed by the business and has been so consistently employed.
9. Certification that correct method of accounting has been employed by the business and has been so consistently employed.
10. Certification that VAT has been paid in time, and if not certifying the amount of interest payable by the taxpayer due to delayed payment of VAT.

Truthfulness, fairness and correctness of books of accounts is very much underlying feature of VAT in absence of any of which may result in penalties for the business. Having a purely un-biased view, may we even think that any person other than a Chartered Accountant may comply with these requirements that demand highest degree of professional competence acquired through time-tested techniques, rigorous training set audit procedures and practices. It is not only the VAT Audit where expertise of Chartered Accountants is required. Herein below I would like to mention with confidence the areas of professional responsibilities which can be complied with only by a Chartered Accountant: Truthfulness, fairness and correctness of books of accounts is very much underlying feature of VAT in absence of any of which may result in penalties for the business. Having a purely un-biased view, may we even think that any person other than a Chartered Accountant may comply with these requirements that demand highest degree of professional competence acquired through time-tested techniques, rigorous training set audit procedures and practices.

It is not only the VAT Audit where expertise of Chartered Accountants is required. Herein below I would like to mention with confidence the areas of professional responsibilities which can be complied with only by a Chartered Accountant:

1. Expert advisory services in Accounting matters so as to properly guide the taxpayer about proper keeping up of books of accounts as proper books of accounts have assumed greater importance in the VAT regime.
2. Calculation of Input Tax Credit, reversal of Input Tax Credit. For example, in case of branch transfer and in case of goods sent for job work, ITC is to be reversed at the rate of 4% of cost of goods. It is only Chartered Accountants who can certify the cost of goods sent for branch transfer or job work.
3. Most of the VAT legislations have provisions to the effect that it shall be incumbent upon the person, who maintains the electronic records to produce on demand, the relevant records, in hard copy and/or in the electronically legible format along with the flow and treatment of transactions through the accounting system, along with account of the audit trial and inter-linkages, whether paper or electronic, and the financial accounts record layout, data dictionary and the total number of records in each field, from the stage of initiation to closure and storage to the designated officer, or the audit parties, deputed by the competent authority. Again it is only Chartered Accountants who may so submit this information. Additionally now Chartered Accountants who are also qualified as Information System Auditors are providing services as Information System Auditors.

We discussed where only and only Chartered Accountants could do. In addition, Chartered Accountants are also providing VAT related services like Registration, De-registration, tax planning, system audit and vat investigation. Chartered Accountant with professional experience of a specified time is also eligible for the membership of Tribunal under the state VAT legislations.

So it is not only the VAT Audit but also all pervasive services of Chartered Accountants that are required today in the interest of society. We see through the above referred matter and illustrations that services of Chartered Accountants have been and will always be very much useful as well as indispensable to the business community, the legislators, the officials and the society as a whole.

I seek your permission to conclude not with my own words but with the words of eminent persons and dignitaries on the role of Chartered Accountants. Sh. Ramesh Chandra, Member Secretary, Empowered Committee of State Finance Ministers on VAT expressed,” I think we will be able to make a success of Value Added Tax in the country and in that Chartered Accountants are going to be our strong allies and we will be depending on Chartered Accountants”. Honorable Finance Minister of India once expressed, ”Institute of Chartered Accountants of India has been our valued partner in designing tax laws. ICAI helped in designing of VAT and implementation of VAT”.

So VAT Audit is rather a facility to business community and a responsibility for the Chartered Accountants.

The author is a member of the Institute. The views expressed herein are his personal views and do no necessarily represent the views of the Regional Council