- An Act to consolidate and amend the law relating to companies and certain allied associations.
- Relevant provisions of all Indirect Taxes apply to a company in the same manner as to other persons. However, certain specific provisions apply to a Company which can be understood from the decided cases.
Can Company be prosecuted?
Company, though it is not a natural person but ‘legal’ or ‘juristic’ person, and thus, cannot be ordered to suffer imprisonment, however, other consequences would ensue, e.g. payment of fine etc. In other words, it was held that ‘Corporate criminal liability’ is not unknown to law. – Madhumilan Syntex Ltd. v Union of India 2007 (210) E.L.T. 484 (S.C.)
Recovery of government dues
Recovery of taxes, liability of which had arisen within twelve months, from a Company in liquidation, shall have priority over other dues. Ref : Section 530(1) (a) – Rajratha Naranbhai Mills [1991 (52) E.L.T. 335 (S.C.)]
Amalgamation – implications
For all purposes of indirect taxes including clubbing of clearances in case of an Amalgamation, shall be effective from the date of amalgamation whereon the Transferee takes over of all assets and liabilities. – Kwality Zipper Ltd. v Commissioner of Central Excise, Kanpur [2002 (145) E.L.T. 296 (Tri. – Del.)]
Relevance of Financial Statements of a Company
Demand on the basis of balance sheet and profit and loss account prepared and adopted by a Company has been upheld by Hon’ble Tribunal. Appellant’s plea that mention of fabrication of plant and machinery was made in the balance sheet to present a rosy picture of the company to the share holders or the equipment did not reach the finished stage is not acceptable – Usha Rectifier Corpn. (I) LTD. V CCE, New Delhi [2001 (130) E.L.T. 485 (Tri. – Del.)].
Audit by CAG
In absence of any enabling provision empowering CAG to audit accounts of non-government company, plea that Sections 14(2) and 16 ibid enables it to do so was rejected by the Hon’ble Court. The decision was based on the understanding that Companies Act, 1956, Income Tax Act, 1961, Central Excise Act, 1944 or Finance Act, 1994, do not have any provision for audit by CAG of company incorporated or existing under Companies Act, 1956, except a government company within meaning of Section 619 of Companies Act, 1956 –
matter referred to Division Bench-SKP Securities P. Ltd. [2013(29) STR 337(Cal)]
Rule 5A of Service Tax Rules, 2004:
Every assessee shall, on demand, make available to the officer authorised under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party, as the case may be