Specialised tax audit by qualified accountants upheld as a valid compliance measure tied to anti-evasion objectives.

A statutory tax audit can validly be confined to chartered accountants and cost accountants where the function is specialised, the classification has a rational nexus with preventing evasion and ensuring compliance, and other professionals retain their separate right of appearance before tax authorities. The audit requirement under the Maharashtra VAT law was held ancillary to the State's taxing power, not an impermissible delegation of assessment, because statutory authorities retained control over returns and scrutiny. The related constitutional challenges under Articles 14, 19(1)(g), 265 and 301 therefore failed, and the audit provision was upheld.

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Issues: (i) Whether section 61 of the Maharashtra Value Added Tax Act, 2002, by confining audit to chartered accountants and cost accountants, is unconstitutional as arbitrary or discriminatory under Articles 14 and 19(1)(g) of the Constitution of India. (ii) Whether section 61 is beyond the legislative competence of the State Legislature under Entry 54 of List II of the Seventh Schedule to the Constitution of India or amounts to impermissible delegation. (iii) Whether section 61 is invalid as offending Articles 265 and 301 of the Constitution of India.

Issue (i): Whether section 61 of the Maharashtra Value Added Tax Act, 2002, by confining audit to chartered accountants and cost accountants, is unconstitutional as arbitrary or discriminatory under Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The audit contemplated by section 61 was treated as a specialised accounting function requiring expertise in examination of books, vouchers, verification of returns, and certification of compliance. The Court compared the provision with section 44AB of the Income-tax Act, 1961 and relied on the settled position that chartered accountants constitute a distinct class for audit work because of their training and professional aptitude. Advocates and sales tax practitioners were held to remain fully entitled to appear before authorities under section 82 of the Act, so the provision did not prohibit them from practising their profession. The classification was found to have a rational nexus with the object of preventing tax evasion and ensuring proper audit of dealers crossing the prescribed threshold or engaged in specified liquor , and the State was entitled to choose a specialised category for audit in economic legislation.

Conclusion: The challenge under Articles 14 and 19(1)(g) failed and section 61 was upheld.

Issue (ii): Whether section 61 is beyond the legislative competence of the State Legislature under Entry 54 of List II of the Seventh Schedule to the Constitution of India or amounts to impermissible delegation.

Analysis: The Court held that prescribing audit, maintaining books, and requiring certification as part of the machinery for levy and collection of sales tax is ancillary to the taxing power under Entry 54. The provision did not transfer the power of assessment to a third party, because the accountant only certifies the accounts and the statutory authorities retain power to accept returns, examine correctness, and direct audit under section 22. The measure was therefore treated as part of the regulatory and procedural framework of the tax statute and not as an abdication of essential legislative function.

Conclusion: The challenge on legislative competence and delegation failed.

Issue (iii): Whether section 61 is invalid as offending Articles 265 and 301 of the Constitution of India.

Analysis: The Court held that the fee payable for audit was not a compulsory levy imposed by the State, but a consequence of the dealer's choice and statutory obligation to obtain audit from a qualified accountant. The provision was also not regarded as a restriction on inter-State trade or commerce within Article 301, because it operated as a valid fiscal compliance requirement within the State's legislative power and did not regulate trade in the constitutional sense.

Conclusion: The challenge under Articles 265 and 301 failed.

Final Conclusion: The impugned audit provision was sustained in full, and the petitions were rejected with interim extension granted only for filing the prescribed form.

Ratio Decidendi: Where a tax statute requires compulsory audit as a machinery measure to prevent evasion and ensure proper compliance, the Legislature may validly confine that audit to a specialised professional class having the requisite training, so long as the classification has a rational nexus with the object and does not deprive other professionals of their separate right of appearance.

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