Cost Audit Non Compliance
As per Law, the Cost Audit is compulsory in certain cases (Turnover over Rs 100 Crores p.a.)
Cost records are compulsory , for Turnovers over certain limits for certain specified industries.
This is a rare case of conviction for violation of provisions of the Companies Act. The Economic Offences Wing Court in Hyderabad has found Ameya Laboratories and its managing director guilty of failing to file a cost audit report to the Registrar of Companies (ROC).
The company conducted sales or supplied products worth Rs 269 Crores, but did not file the report within the stipulated time.
Both prosecutions were filed by the Registrar of Companies, Hyderabad for non-filing of cost audit reports to the central government within a stipulated period as per Companies Act, 2013 under Section 233(b) for 2012-13 and 2013-14 fiscals. According to the preceding fiscal filed with ROC, the company’s turnover from sales or aggregate value of the turnover from the sale or supply of products as evident from profit and loss on March 31, 2011, was Rupees 269 Crores, making it liable to file a cost audit report to the central government.
ROC officials said that both cases were proved by the prosecution, and these are the fourth and fifth successful prosecutions, resulting in the convictions and imprisonment of the accused.
However, this is a rare case where an accused has been given rigorous imprisonment under the Companies Act for non-compliance.
The company has been found guilty and sentenced to pay a fine of Rs 3,000, while the Managing Director has been sentenced to rigorous imprisonment for five months and directed to pay a fine of Rs 2,000.
Under the Companies Act, companies with a turnover exceeding a specified amount are required to file a cost audit report to the central government. The objective of this requirement is to ensure that companies are maintaining adequate cost records and that their cost accounting practices are in compliance with the established norms.
According to Section 233(b) of the Companies Act, every company engaged in the production, processing, manufacturing or mining activities and whose annual turnover exceeds the threshold limit, as prescribed by the central government, is required to get its cost accounting records audited in the manner specified by the government.
The Companies Act also mandates that the cost audit report must be filed with the Registrar of Companies (ROC) within the stipulated time period. Failure to do so is considered a violation of the Companies Act and can result in penalties and even imprisonment, as in this case here.
Read More: https://www.taxscan.in/hyderabad-eow-court-convicts-md-for-non-filing-of-cost-audit-reports/260791/
Members are suggested to get themselves complied with in the Cost Records and Cost Audits area too.
This was a Sick company,
already shut down as per this site on rediff.com. This was a listed company in 2011 to 2016. then it apparently shut down. See the link below.