Petitioner-co. wasn’t required to appoint Cost Auditor where turnover of individual products was below Rs.35 Cr.: HC
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Case Details: Srinidhi Industries Ltd. v. Registrar of Companies - [2022] 141 taxmann.com 48 (HC-Madras)
Judiciary and Counsel Details
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- N. Sathish Kumar, J.
- Arjun Suresh & Ramaswamy Meyyappan for the Petitioner.
- Dr D. Simon, Central Govt. Standing Counsel for the Respondent.
Facts of the Case
In the instant case, the criminal original petition was filed to quash the proceedings against the petitioner – company for the alleged offence under section 148 of the Companies Act, 2013.
The allegations in the complaint was that the petitioner – company had not appointed the Cost Auditor within the prescribed limits as specified in section 148 of the Companies Act, 2013.
The plea submitted by the company was that Company will not fall under the threshold limit of appointing the cost auditor the respondent has taken overall turnover and filed a complaint.
The learned counsel for the petitioners pointed out that the manufacturing cost for the financial year 2014 to 2018 shows that all the amounts are below Rs. 35 Crores.
Rule 4 (2) of Companies (Cost Records and Audit) Rules, 2014
Every company specified in item (B) of rule 3 shall get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is rupees 100 crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees 35 crore or more.
The Rule 4(2) clearly shows that the aggregate turnover in respect of individual product or products or service or services for which the cost records are required, be maintained under rule 3, is Rs. 35 crore or more, in respect of item (B) of rule 3.
Therefore, the said Rule makes it clear that as far as the production is concerned, if the turnover is below Rs. 35 crore, the cost audit is not required.
As, in the instant case statements filed for the financial year 2014-2018 clearly show that the turnover is below Rs. 35 crore.
High Court Held
The court held that the criminal proceedings initiated against the petitioners are liable to be quashed.
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