Page 207 - CA Final PARAM Digital Book.

concerned for a period of more than six months from the date they became payable, shall be
indicated

It is important to mention that any sum, which is to be regularly paid to an appropriate authority
under a statute (whether Central, State or Local or Foreign) applicable to the company, should be
considered as a “statutory due” for the purpose of this clause. In other words, obligation to pay a
statutory due is created or arises out of a statute, rather than being based on an independent
contractual or legal relationship.

(i) Any sum payable to an electricity company as electricity bill would not constitute statutory due
despite the fact that such a company has been established under a statute. This is so because the
due has arisen on account of contract of supply of goods or services between the parties. Thus,
reporting under CARO is not required for electricity dues.

(ii) In the given situation, payment of import duty where the goods had been imported five years
back and were placed in the bonded warehouse and even till the end of the financial year under
audit, the goods have not been removed from such warehouse. It may be noted that when the
imported goods are lodged in a bonded warehouse, the payment of import duty is to be made when
the goods are removed from the bonded warehouse. However, till the time the importer opts to
remove the goods from the warehouse, the importer is required to incur the rent and interest
expenditure on the amount of customs duty payable. Since the payment of the custom duty is not
due in the current case, the question of regularity does not arise in respect of custom duty.
However, it may be noted that the interest and rent that are required to be incurred under section
61 of the Customs Act, 1962 would come under other statutory dues and the auditor would have to
examine and comment upon the regularity of the company in depositing such interest and rent.

(iii) In the given situation, the company has received income tax assessment order along with
demand notice from Assessing Officer and company has not paid such demand and is also not in
agreement for the same. Further, the company has just merely represented before the Assessing
Officer. The auditor is required to check whether time limit for filing the appeal is expired /
application for rectification of mistake or not. In case time limit, for filing the appeal or application
for rectification of mistake, has expired disputed amount will become undisputed statutory due (as
mere representation to the concerned Department shall not be treat ed as a dispute).

Further, the auditor is also required to ascertain whether such dues are outstanding for a period of
more than six months from the date they became payable. Accordingly, after ensuring the above, if
the statutory dues are outstanding for more than six months the auditor is required to report the
same under clause (vii)(a) of CARO, 2020.

However, in case the statutory dues are not outstanding for a period of more than six months from
the date they became payable the auditor is not required to report the same under CARO.

(iv) It is possible that in a large company where there are a number of departments with separate
payrolls and where payments are spread over a number of days, the collection of data regarding the
provident fund/employees’ state insurance collections and the company’s contribution thereto may
take some time. In order to ensure that deposit of the dues is made in time, the company may make
lump-sum deposits of estimated amounts and adjust the excess or deficit against the following
month’s deposit. If this method is consistently followed and the difference between the total dues
and the lump-sum deposit is not significant, it need not be considered that dues have not been
regularly deposited and no unfavourable comment is necessary. Thus, no reporting is required for
the same under CARO.

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