Advocate Deepak Bapat
1. All the Ministers, MP’s, MLA’s and Judges in India are under wrong impression that only Chartered Accountants are in practice of taxation. Therefore, the taxation laws are being drafted only with the advice of Chartered Accountants working in various Government Departments or as the case may be with the advice of the Institute of Chartered Accountants of India.
2. Under the Income Tax, Excise, Service Tax and Sales Tax Act, following professionals are allowed to prepare returns, statutory compliance etc. and to attend before the Officers & Tribunals in every proceeding under the Act:
(ii) Sales Tax Practitioners(Commerce graduates and retired officers of the Sales Tax Department)
(iii) Income Tax Practitioners(Commerce graduates and retired officers of the Income Tax Department)
(iv) Retired Officers of the Excise Department
(v) Chartered Accountants
(vi) Cost Accountants
(vii) Company Secretaries
3. Under Section 35Q of the Central Excise Act, there is no concept of Excise Practitioner or Service Tax Practitioner. However, the CA’s, Cost Accountants and retired officers of the Excise Department are allowed to appear before the Excise Officers & Tribunals as ‘Agent’ of the Tax Payer. In every State, Commerce graduates and retired officers of the Sales Tax Department are enrolled with the Commissioner of Sales Tax as Sales Tax Practitioner(STP). Similarly, under the Income Tax Act, commerce graduates are enrolled with the Commissioner of Income Tax as Income Tax Practitioner(ITP). It is a matter of surprise, as to why there is no provision under the Excise Act, to enroll commerce graduates as Excise & Service Tax Practitioner, when, even the CA (who knowns only accounts) is allowed to attend as ‘Agent’.
4. The reason for the above is that, the ITPs & STPs does not have the Governing Act and Governing Institute to convince the Government of India that the STP’s have sufficient knowledge of accounts to practice as ‘Excise & Service Tax Practitioner’. The Advocates, Chartered Accountants, Cost Accountants and Company Secretaries are governed respectively by the Bar Council of India, Institute of Chartered Accountants of India, Institute of Cost and Works Accountants of India and Institute of Company Secretaries of India. The aforesaid Institutes(Governing Body) are established under the respective Act of Parliament of India.
5. The Government of India has completely ignored the above important aspect regarding STP’s, while introducing GST, and without the application of mind, introduced the scheme of ‘Tax Return Preparer’ under which, any commerce graduate can prepare the GST return. As the STPs have played the important role for successful implementation of Sales Tax Law, I strongly suggest that, before the introduction of GST, the Central Government should introduce the ‘Goods & Service Tax Practitioners Act of India’ to govern the ‘Sales Tax Practitioners’ who are presently enrolled with the Commissioner of Sales Tax of each State. Needless to state that the aforesaid Act can be enacted even before the GST Act comes into force, because currently also, Goods and Services are being taxed under the respective Act and therefore the STP’s and retired officers who are attending the proceedings under the respective Act, can be called as GST Practitioner within the meaning of ‘GST Practitioners Act of India’.
6. If the GST Practitioners Act is brought in force and GST Practitioners Institute is established thereunder, every “GST Practitioner” will be subject to statutory discipline. Moreover, because of examination and obligatory training courses conducted by the GST Practitioners Institute, he will be proved of immense help to the GST Department to increase legitimate revenue. On the eve of GST Act where e-compliance would be a key factor, the “Institute of GST Practitioners of India” would produce a GST practitioner, with the level of assurance and creditability expected by the Parliament of India. I, as then President of the Sales Tax Practitioners Association of Maharashtra, tried with the Government of Maharashtra, for the introduction of the ‘Sales Tax Practitioners Act of Maharashtra’. However, the Ministers and IAS officers for the reasons known to them refused to do so.
7. The number of STPs Enrolled with the Commissioner of Sales Tax, Maharashtra State, are more than 16,000. All over India, the number of STPs is more than 3,50,000. In the year 2010, the Central Government prepared the Bill to introduce the Legal Practitioners Act. As there was a mistake of including the Advocates who are already governed under the Advocates Act, it was opposed by the Bar Council of India.
8. As per Section 2 of the Chartered Accountants Act, any CA is supposed to practice only accounts and audit. However, by disregarding the aforesaid provision, CAs are carrying out other activities such as filing up the forms of returns under the Taxation Act, filing up the forms for license or registration certificate under Bombay Shops and Establishment Act, Public Trust Act etc. In number of cases, the High Courts and Supreme Courts have held that the Chartered Accountants cannot argue the cases under the Consumer Protection Act, Labour Act etc. Inspite of the above, CAs are arguing the cases before the appellate authorities and Tribunals. The above acts of CAs is the violation of Section 2 of the Chartered Accountants Act.
9. The present Tax Laws and Section 86 of the GST Model Law allows other professionals(though they are not Advocates), to attend before the authorities & Tribunal in any proceeding. However, it is required to be taken into account that the said provision does not allow them to plead or as the case may be to practice such tax law, as if he or she is an Advocate. Inspite of that, large number of CAs are pleading before the tax authorities and thus carrying out the practice of law. The above action of such CAs is liable for criminal action under Section 45 of the Advocates Act.
10. As stated in the beginning, because of unawareness of Politicians, they are treating CAs as supreme, for practice of tax laws, though other professionals are also successfully practicing under the tax laws. This unawareness resulted in introducing the provision of audit (only by CA) under the Income Tax and Sales Tax Laws. Once the CA is appointed as Auditor, the tax payer does not appoint the Advocates and Tax Practitioners for the work of preparation of returns and attendance etc. Since 1983 i.e. after introduction of Audit provision under the Income Tax Act, large number of Advocates lost their cream clients and the new generation of Advocates is reluctant to practice on tax laws. Same is the suffering of ITPs and STPs. The above situation, gave an opportunity to CAs to canvass that very few Advocates are practicing under tax laws. About the ITPs & STPs the Courts have taken the view that as they are not governed by the Statutory Body and Statutory Act, their level of assurance and creditability cannot be guaranteed.
11. The aforesaid facts and circumstance makes it clear that large number of STP’s and Advocates are practicing in the field of Sales Tax, Excise and Service Tax. The knowledge of accounts required for preparation of returns and for audit of accounts, is identical. The knowledge of accounts has the importance of only the facts of the case. Therefore, only because the CAs are conversant with accounts, they cannot claim supremacy in the practice of GST Law. As such, there is no logic in allowing only CA’s and Cost Accountants to conduct the audit of accounts under Section 42(4) of the Model GST Act. In fact, the term ‘audit of accounts’ is a misnomer. It creates an impression that being audit of accounts, it is the domain of only CAs. Therefore, the said term is required to be replaced by the words “Compliance Report’. As the provision of the said audit by CAs has created their monopoly, you are requested to stop the same for the reasons explained hereinbefore, by making suitable amendment to the GST Act.
12. The provision of appointing Tax Return Preparers vide Section 34 of the Model GST Act will result into creation of unqualified GST Practitioners. It is required to be taken into account that for preparation of returns under the Tax Law, the knowledge and practice under the said Act is essential. Only because such a person can operate computer and can make use of software for preparation and uploading of returns and various reports under the GST Act, there is no logic in appointing them as Tax Return Preparers. Hence the said provision is required to be removed.
13. The provision of allowing a taxable person to be represented by his relative or employee is also not logical. The permission to allow a litigant to appear in person before any Court should not be equated with the relative or employee. Therefore, only in exceptional circumstances, such permission should be granted.
14. Under the circumstance, I suggest the Finance Minister to do the following:
(i) To amend Section 42(4) of the Model GST Act in such a manner that the term ‘audit of accounts’ should be replaced with the words ‘compliance report’ and the GST Practitioner, Advocate, Cost Accountant, Company Secretary and Chartered Accountant be allowed to certify the said ‘compliance report’.
(ii) To enact “The GST Practitioners Act of India” and establish thereunder “The Institute of GST Practitioners of India”.
(iii) To amend Section 86 of the Model GST Act in such a manner that any person who, immediately before the commencement of this Act was qualified to appear as a Sales Tax Practitioner, shall be continued to appear as a Goods & Service Tax Practitioner for representing a taxable person in any proceeding.
(iv) To amend Section 86 of the Model GST Act in such a manner that the qualifications which were prescribed for a Sales Tax Practitioner under any earlier law, shall also be prescribed for a Goods & Service Tax Practitioner within the meaning of Goods & Service Tax Practitioners Act of India.
(v) To amend Section 86 of the Model GST Act in such a manner that a relative or regular employee of a taxable person cannot appear in any proceeding on behalf of a taxable person.
(vi) To delete Section 34 of the Model GST Act which provides for Tax Return Preparers.
(vii) To amend the Income Tax Act on the aforesaid lines.
(Author is an Advocate & Sales Tax Consultant and can be reached Email:firstname.lastname@example.org, Mobile: 9820528006 )