2015 (3) TMI 1252 - HC - VAT and Sales Tax

Jurisdiction of Joint Commissioner of Commercial Taxes Enforcement - power to order Audit of the business of any registered dealer - Held that - as per provisions of the Section 64 (4) of the TNVAT Act only the Commissioner can authorize the Deputy Commercial Tax Officer to conduct VAT Audit - impugned order not correct set aside - petition allowed.

Summary

Issues: Jurisdiction of Joint Commissioner to order audit of registered dealer under Section 64(4) of Tamil Nadu Value Added Tax Act.

Analysis:
The petitioner challenged the authority of the Joint Commissioner of Commercial Taxes, Enforcement to order an audit of a registered dealer's business, citing Section 64(4) of the Tamil Nadu Value Added Tax Act, which vests this power solely with the Commissioner of Commercial Taxes. The petitioner also referenced an interim order from the Madurai Bench of the Madras High Court, which stayed a direction allowing delegation of such power to an officer below the rank of Deputy Commissioner. The respondents argued that the presence of a note in the file would authorize audit inspection of a registered dealer. After hearing both parties and examining the documents, the court noted that the impugned order indeed authorized the Joint Commissioner to conduct the audit, contrary to the statutory provision of Section 64(4) which specifies that only an officer not below the rank of Deputy Commercial Tax Officer can be authorized for such audits. Consequently, the court accepted the petitioner's contention and set aside the impugned order, emphasizing that the Commissioner retains the authority to order audit inspections as required.

In a detailed analysis, the court referred to Section 64(4) of the Tamil Nadu Value Added Tax Act, which outlines the conditions under which the Commissioner may order an audit of a registered dealer's business. The provision specifies that the audit can be conducted by an officer not below the rank of Deputy Commercial Tax Officer and lists criteria for selecting dealers for audit, such as failure to file returns within the prescribed period, claiming excessive tax refunds, or submitting returns that the Commissioner deems unsatisfactory. The court highlighted that the impugned order allowing the Joint Commissioner to conduct the audit did not align with the statutory mandate, leading to the decision to set it aside and affirm the Commissioner's authority in ordering audit inspections.

Ultimately, the court ruled in favor of the petitioner, allowing the writ petition and closing the connected miscellaneous petition without imposing any costs. The judgment clarified the statutory framework governing the audit of registered dealers' businesses under the Tamil Nadu Value Added Tax Act, emphasizing the exclusive authority of the Commissioner, in line with the provisions of Section 64(4), to order such audits by designated officers as prescribed by law.