CARO Clause 4(ix)(b) vs AS 29 Disclosure
CARO requires that in case of disputed statutory dues, the amounts involved should be stated along with the forum where the dispute is pending.
The verbatim of the clause is "In case dues of Income Tax/ Sales Tax/ Service Tax/ Customs Duty/ Wealth Tax/ Excise Duty/ Cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned."
Now, our concern as an auditor is to understand
1. What do you mean by Dispute ??
2. How much is the amount to be showed under this close ?
3. How is this clause related to what is disclosed as per the Notes to accounts ?
The following points are noteworthy for the purpose of CARO
- mere representation to the concerned Department does not constitute dispute
- there should be an appeal before the relevant appellate authority
- application for rectification of mistake - constitutes dispute
- show cause notice and demand may be combined in one document. - Demand notice may be considered as dispute
- Demands set aside are not dues
- Demands referred for reassessment and earlier demand set aside - does not constiture dispute. Wordings of the order is important to determine whether the demand is cancelled or not.
- Demands stayed - will be considered as disputed
- If the time limit for filing appeal has lapsed and amount of dues is still pending, then this would become UNDISPUTED DUES
- The amount to be shown here is the UNPAID AMOUNT