2012 (3) TMI 380 - HC - VAT and Sales Tax

Power of Joint Commissioner (CT) - whether the Joint Commissioner has the power to collect the tax, said to be payable by the petitioner? - Held that - the powers conferred, u/s 64(4) of the TNVAT Act, 2006, does not provide the power or the authority to the respondents to collect the tax, said to be payable by the petitioner. The enforcement wing officials had no jurisdiction to collect tax at the time of the inspection, without verification of the monthly returns, before the completion of the assessment - the first respondent is directed to return the cheques to the petitioner, within a period of ten days - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Jurisdiction of enforcement officials to collect tax during inspection without verification of monthly returns.
2. Authority of respondents to collect tax under section 64(4) of the Tamil Nadu Value Added Tax Act, 2006.
3. Legality of forcibly collecting cheques from the petitioner.
4. Relief sought by the petitioner under article 226 of the Constitution of India.

Analysis:
1. The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006 and the Central Sales Tax Act, 1956, was subjected to a spot inspection by the second respondent and officials, leading to an audit under section 64(4) of the TNVAT Act for the assessment years 2007-08 to 2009-10. The petitioner alleged an omission to pay tax during this period.

2. The petitioner contended that the enforcement officials lacked the authority to collect tax during the inspection without verifying the monthly returns, as mandated by law. The court noted that the powers under section 64(4) of the TNVAT Act do not explicitly grant the respondents the authority to collect tax directly from the assessee during an inspection.

3. Despite the petitioner's explanation, the officials forcibly collected three cheques totaling Rs. 5,35,386 from the petitioner. The court found this action to be beyond the powers of the enforcement officials, leading to the petitioner seeking relief through a writ petition under article 226 of the Constitution of India, specifically requesting a writ of mandamus for the refund of the amount collected.

4. The court directed the first respondent to return the cheques to the petitioner within ten days, emphasizing that the respondents and their officials lacked the authority to collect the cheques during the inspection. However, the court clarified that the first respondent could still issue appropriate assessment orders for the relevant years within four weeks. The writ petition was granted in favor of the petitioner, with no costs imposed.