US SEC heightening scrutiny of auditors' crypto work : report

29TH DECEMBER,2022

The US Securities and Exchange Commission (SEC) is heightening the scrutiny of the work audit firms do for cryptocurrency companies, a senior official of the regulator told the Wall Street Journal. "We're warning investors to be very wary of some of the claims that are being made by crypto companies," said Paul Munter, SEC's acting chief accountant in an interview with the journal.
The SEC did not immediately respond to a Reuters request for comment on the report. The development comes as the implosion of FTX has rippled across the industry, hobbling liquidity at firms with exposure to what was once one of the world's biggest crypto exchanges, and has prompted investigations by regulators in several countries. Last month, FTX filed for US bankruptcy protection and its founder Sam Bankman-Fried resigned as chief executive, after rival exchange Binance walked away from a proposed acquisition.

Audits

Use third party validation to check fraud: Sebi chairperson Madhabi Puri Buch to auditors

19th December,2022

Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch nudged auditors to use technology-driven third-party validation in the auditing process in order to check fraud. "Sebi's thrust on third-party validation is driven by the commitment to ensure a true and fair picture of whatever is presented in the markets," Buch said while addressing auditors at an event organised by the Indian Audit and Accounts Department.

Buch said there are more than 20 websites in the country which auditors can use to validate the claim of the auditee.
While technology is being used as a tool by fraudsters, we can use the same technology to evade fraud. Auditors can use tools like GSTN portal, bank websites etc. for doing a third-party validation," she said

Audits

SC extends medical bail of ex-statutory auditor of Amrapali Group

19th December,2022

The Supreme Court  extended the medical bail of the former statutory auditor of the Amrapali Group of Companies, once a real estate giant but now embroiled in a string of court battles over undelivered housing projects. A bench of Justices Sanjay Kishan Kaul and Abhay S Oka took on record the report of petitioner Anil Mittal submitted by the medical board constituted by the AIIMS.

"Counsel for the petitioner states that the counsel who has to address submissions is on his legs in a part-heard matter and ASG appearing on the opposite side was informed though the adjournment letter is not before us

Audits

NFRA BEGINS INSPECTIONS OF FIVE AUDIT FIRMS

18th December,2022

The National Financial Reporting Authority (NFRA), the country’s sole independent audit regulator, has started inspections of five audit firms. NFRA Chairman Ajay Bhushan Pandey said the inspections will take three weeks to complete and a draft report is expected before financial year end.

In November, NFRA had stated in its guidelines that inspections are intended to identify areas and opportunities for improvement in the audit firm’s system of quality control. Inspections will consist of firm-wide review of audit quality (SQC 1) and individual file reviews on test-check basis to evaluate the level of compliance with applicable auditing standards and quality control policy and processes. 

Audits

NCLT ADMITS VHM INDUSTRIES FOR INSOLVENCY

20th December,2022

The decision of Mumbai bench of The National Company Law Tribunal (NCLT) came on a petition filed by the State Bank of India. The lender had approached the bankruptcy court in 2019 after the company defaulted on dues of more than Rs. 221 cr.

The supply of essential goods and services to the company should not be terminated, suspended or interrupted during the moratorium period under the CIRP, the NCLT bench of members HV Subha Rao and Anuradha Sanjay Bhatia said in an order dated December 16.

The bankruptcy court has admitted VHM Industries to undergo the corporate insolvency resolution process (CIRP) and appointed Sunil Kumar Agrawal as the interim resolution professional for the Mumbai- based taxtile manufacture.

Corporate Laws

NCLT admits listed coaching firm MT Educare under Corporate Insolvency Resolution Process

21th december,2022

A bankruptcy court has admitted MT Educare, formerly known as Mahesh Tutorials, into the Corporate Insolvency Resolution Proceedings (CIRP) and has appointed Ashwin Bhavanji Shah as interim resolution professional for the Mumbai-based coaching firm.

The Mumbai bank of the National Company Law Tribunal (NCLT) allowed the company’s operating creditor, Connect Residuary, to initiate insolvency proceedings. The operating creditor approached the bankruptcy court in November last year after the company defaulted on its instalments of around Rs 5.37 crore.

“After hearing the submissions of both parties and carefully reading the material available on the record, this court is fully satisfied that the operating creditor has successfully demonstrated the existence of ‘debt’ and ‘default’ committed by the corporate debtor (MT Educare ) in this case,” observed the court of HV Subba Rao and Anuradha Sanjay Bhatia in a December 16 order.

Corporate Laws

48th GST Council Meeting Highlights

17 December,2022 

The 48th GST Council meeting was held on 17th December 2022, Saturday, virtually from New Delhi. Smt Nirmala Sitharaman, the Union Finance Minister, chaired the meeting, along with the Finance Ministers of the states/Union Territories. Eight points out of 15 items on the Council’s agenda, including data-sharing matters, were discussed.

Summary of Key Highlights of the 48th GST Council meeting are as follows :-

• Decriminalisation of three kinds of offences under GST: Obstruction of duties of an officer, the threshold amount of tax for launching criminal offence under GST increased from the current limit of Rs.1 crore to 2 crores, except where fake invoices are involved and to reduce the workload of courts decriminalised the compounding of offence up to a limit;
• A few GST rate rationalisation matters were taken up – GST on pulse husks for cattle feed (including chilka and concentrates) was reduced to nil from 5%. Further, the concessional 5% GST on ethyl alcohol was extended to refineries for blending with petrol, which was earlier charged at 18%.
• Clarifications were given on a few taxation matters, such as the GST on equipment used by petroleum companies for exploration and how to deal with mismatches of invoices in GSTR-1 vs GSTR-3B in the early years.
• e-Commerce operators can allow the suppliers to be registered under the composition scheme and unregistered vendors, facilitating e-commerce for all the micro-enterprises.
• The second report on casinos and online gaming was not circulated and hence not part of the 48th meeting agenda.
• No decision has been taken on any GST rate hike.
• Cess on SUV at 22% clarified- Applicable if meets 4 criteria-
  • Popularly known as SUV, 
  • The engine capacity of more than 1500 cc,
  • Length more than 4000 mm and
  • Ground clearance equal to or more than 170 mm
• Further, Council clarified that no GST on insurance is levied on the No-claim bonus offered by insurance companies, so it is deductible from the premium without a GST charge.

GST

Partial relaxation with respect to electronic submission of Form 10F by select category of taxpayers in accordance with the DGIT (Systems) Notification No. 3 of 2022.

18th December,2022

As per Notification No. 03/2022 dated 16th July 2022 issued by Directorate of Income Tax (Systems) New Delhi in exercise of powers conferred under Rule 131(1)1(2) of the Income-tax Rules mandating, inter alia, furnishing of Form 10F electronically.
On consideration of the practical challenge being faced by non-resident (NR) taxpayers not having PAN in making compliance as per the above notification, and with a view to mitigate genuine hardship to such taxpayers, it has been decided by the Competent Authority that such category of Non­resident taxpayers who are not having PAN and not required to have PAN as per relevant provisions of the Income-tax Act,1961 read with Income-tax Rules, 1962, are exempted from mandatory electronic filing of Form 1OF till 31st March 2023. For the sake of clarity, it is reiterated that such category of taxpayers may make statutory compliance of filing Form 10F till 31st March 2023 in manual form as was being done prior to issuance of the DGIT(Systems) Notification No. 3 of 2022.

Income Tax