Sec. 84: Chartered Accountants, beware!

Page 148 of the Revenue Manual of the ESIC says as under:

“Self Certification of Employers in Return of Contributions – To streamline and simplify the process of Revenue enforcement and with a view to lay focus on coverage and registration of all coverable employees to enable them to avail the benefits without hassle, the Corporation in its meeting held on 16.12.2007 resolved to amend Regulation 26 and Form 5 of the ESI (General) Regulation 1950. A notification to this effect has been issued on 11.3.2008 ( Copy enclosed as Annexure 10). Accordingly, Regulation Form 5 ( Return of Contribution) has been modified . The salient features of amendment made in the Return of Contribution are as under :

  1. Self Declaration by employers regarding maintenance of records and registers, submission of Declaration Forms, distribution of Temporary Identification Certificates/Permanent Identity Cards, employees engaged directly or through immediate employers and wages paid to the workers.
  2. All the employers employing 40 and more employees shall have to append a certificate duly certified by a Chartered Accountant in the revised format of Return of Contribution.
  3. Employers employing less than 40 employees will have to provide self-certification without any certification from the Chartered Accountant in Return of Contribution. “

Certification in respect of factories with 4o or more employees

The provisions regarding Certificate by the Chartered Accountants has been issued by the ESIC without consulting the Institute of Chartered Accountants of India. Anyway, it is not mandatory for the employers to get such a certificate. Besides, obtaining such certificates from the employers would be of no use, practically, to any employer.

Moreover, in the event of large scale evasion, the Chartered Accountants who issues false certificates can also be prosecuted along with the employers under Sec. 84. The Chartered Accountants must, first of all, go through the list of certificates printed in the Return of Contribution while they are issuing certificates.

If the employer proves the role of others like Consultants (both from within the ESIC and outside the ESIC) in such evasion, those Consultants would also be within the ambit of Sec. 84.

The employers who entrust  to the Consultants or others, the work of ensuring compliance under the ESI Act,  may get a declaration from those persons that they had ensured compliance in respect of all employees in all respects. That would help the employers in the event of their being prosecuted for non-compliance of any kind.

Sec 84 OneClick on the slides for enlarged view.

Sec 84 Two

So, anyone who advises the employer wrongly to help the latter to evade payment of contribution must be aware of Sec. 84.

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1 Comment

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One response to “Sec. 84: Chartered Accountants, beware!

  1. Abdul Hameed

    The regulation requiring certificate of a CA has exceeded the regulation making powers under Section 97. A return is the summary of information that is available with the person who is required to comply under a law. He is responsible for its contents. Unless a Statutory audit is mandated under the law, the one who is to comply under the law need not get his account audited under a statute though he may get non-statutory internal audit done for his own satisfaction or for the satisfaction of his partners, share holders or those from whom he is seeking business or loan. Statutory audit is prescribed for specified persons only as in Section 44AB of Income tax act, called tax audit, and in certain cases under Companies act. The specific format of audit certificate under such provision is also provided in the statute or in the notification issued under law. ESI Act does not prescribe any mandatory audit and the regulation making powers does not give power to make regulation mandating audit or certification by CA. Audit, in any case, is meant to get true picture of financial health of the business and an auditor can give qualified or unqualified opinion, disclaimer opinion or even adverse opinion, but this will not cvoer a certificate that the person is complying under various kind of law. For Eg. a hotel has to ensure compliance with food security act, various rules of the local municipality health rules and compliance with Electricity act or some times under factory act. Should the Audit confirm that the food served there confirms to food security act, or the machinery are secured against safety hazards under factory act? A knowledgeable CA having enough professional wok will decline to give certificate, but then what abut those not having enough work and want to keep the existing clientele?

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