2015 (10) TMI 2598 - HC - VAT and Sales Tax

Jurisdiction to collect tax at the time of inspection - return of cheques - reliance placed in the decision of the case of Sri Balaji Auto Spares v. Assistant Commissioner (CT), Annadhanapatty Circle, Salem 2012 (3) TMI 380 - MADRAS HIGH COURT for seeking refund of cheques - Held that - it was held in the case that the powers conferred, under section 64(4) of the Tamil Nadu Value Added Tax 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 issue is squarely covered by the facts of the present case, the case is applicable to the present case. The respondents are directed to return the cheques. However the respondents are open to pass appropriate assessment orders - appeal allowed - decided in favor of appellant.

Summary

Issues:
Petition for Writ of Certiorarified Mandamus seeking return of cheques collected during inspection by tax authorities.

Analysis:
The petitioner, running a lodge, filed a writ petition seeking the return of two cheques collected by tax authorities during an inspection. The petitioner argued that the authorities had no jurisdiction to collect the cheques during the inspection. The affidavit stated that only 6 out of 90 rooms were occupied on the day of inspection. The authorities demanded a substantial sum as escaped assessment for two financial years, based on assumptions of full occupancy for 100 days a year. Under threat of coercive action, the petitioner's partner issued two cheques. The petitioner relied on a previous court decision where it was held that tax collection during inspection without verifying returns was unauthorized. The court directed the return of the cheques within ten days, allowing the tax authorities to make proper assessment within four weeks.

The court referred to a previous case where it was observed that tax collection during inspection without verifying monthly returns was unauthorized. The court directed the tax authorities to return the cheques collected during the inspection, emphasizing that authorities lacked the power to collect taxes at that stage. The decision was based on the provisions of the Tamil Nadu Value Added Tax Act, highlighting the importance of following due process before tax collection. The court allowed the tax authorities to conduct proper assessments within a specified time frame, ensuring compliance with relevant laws.

In conclusion, the court allowed the writ petition, quashing the notice from the tax authority and directing the return of the collected cheques. The judgment reiterated the necessity for tax authorities to follow proper procedures and not collect taxes during inspections without verifying returns. The decision provided relief to the petitioner and emphasized the importance of adhering to legal provisions while conducting tax assessments.