A client sent GST money to a chartered accountant for years. The accountant used tax credits to pay less, kept the rest.

A chartered accountant filed a power-sector company's GST returns for years, using tax credit the company did not know it had to cut what it actually owed. He kept billing it the full amount regardless, and admitted as much when asked.¹

What happened#

The money told its own story. Over roughly two financial years the director transferred ₹3,73,950 to the accountant, in six instalments, believing all of it went toward GST (para 5.1, 6). The actual tax payable for those years came to ₹3,60,250 — and the accountant had, on his own admission, set off ₹2,24,818 of input tax credit against it while filing the returns (para 5.2–5.3). None of that credit belonged to him; it was the company's own, earned on tax the company had already paid on its purchases. He never told the client it existed.

Two of the six transfers did not go to the accountant's firm at all. Rs 72,000 and Rs 1,15,200, paid for GST periods in 2017, went instead to his wife's personal account — she too was a chartered accountant. The Board noted that at the time of the first of those two payments, she was not yet a partner in his firm (para 8).

The charge#

• Item (2) of Part IV, read with Section 22 — the First Schedule's general clause for "other misconduct." It carries no fixed list of acts; it catches conduct that discredits the profession once none of the more specific items apply.²

The complaint had alleged two further charges: that the accountant raised fake invoices from bogus companies to claim tax credit that was not genuinely his to claim, and that the rental deed he produced to justify keeping the client's money was itself forged. Neither charge went to a hearing — the Director (Discipline) found no case to answer on either, and the Board proceeded on the misappropriation charge alone.³

What the respondent said#

The findings record no defence beyond what came out under questioning. Asked directly at the hearing why the amount he had collected exceeded what the returns show as paid, the accountant confirmed he had used the balance for himself (para 9). Nothing in the findings disputes the transfers, the tax figures, or the credit he had claimed — his own account of the underlying facts matched the complainant's.

What the Board held#

The Board set what had been transferred against what had actually been due, crediting the accountant with the tax credit he himself admitted using, and found a gap he had not accounted for:

after taking into consideration all the transactions, the amount paid towards GST (Rs. 3,73,950/-), total tax payable (Rs. 3,60,250/-) and Total Input Tax Credit (Rs. 1,34,012/-), it is clear that after equating the said transactions, Respondent utilized the balance amount for himself without informing the Complainant (para 9)

It went on to record the admission that closed the case:

During the hearing, the Board enquired from the Respondent about the utilization of balance amount which the Respondent admitted/ confirmed that he has used the same amount for himself (para 9)

On that basis the Board held that collecting more than was owed, and keeping the surplus without telling the client, was conduct a chartered accountant should not engage in, and found him guilty of other misconduct under Item (2) of Part IV of the First Schedule (para 10, 12).

The order#

Getting a punishment order out of the Board took over three months and four separate hearing dates after the finding of guilt, none of which the accountant attended. Notified of the findings by email and speed post, he told the Board in person that he had never received them; the Institute resent everything by hand delivery, and he still did not appear at the next hearing, or the one after, or the one after that — one of which had to be pushed back a fortnight only because the Presiding Officer fell ill. The Board eventually went ahead without him:

the Board decided to remove the name of [the Respondent] for a period of 03 months from the Register of Members and to impose a Fine of Rs. 1,00,000/- (Rs. One Lakh only) upon [the Respondent] (para 8)⁴

A three-month removal from the Register, combined with a fine, sits at the top of the Board's punishment scale — heavier than a reprimand or a fine standing alone.⁵ The Board's own stated reason was deterrence: the conduct, it said, had "wiped out the trust of the public" that clients place in chartered accountants, and the punishment was meant to be severe enough to discourage others from the same thing (para 6–8).⁶

Why it matters#

This section is ours, not the Board's.

A tax credit that belongs to the client belongs to the client's bill, not to you. Input tax credit reduces what a business actually owes the government. If you use it when filing a client's return, the amount you collect from them for that filing should fall too — collecting the old, higher amount regardless is what this order punished.

"He admitted it" ended the case. There was no forensic reconstruction here — the accountant confirmed under questioning that he had kept the difference. Keeping careful, honest answers ready for a client's own questions is cheaper than answering them for the Board.

Ignoring the Board does not slow down the punishment; it only removes you from the room while it is decided. Four hearings, three months, and the accountant appeared at none of them. The punishment was fixed exactly as if he had.

This summarises a public order and links the primary source. It is general information, not legal or professional advice.