2013 (5) TMI 133 - HC - VAT and Sales Tax

Forceful collection of Tax - Officials had conducted a spot inspection at the petitioners business premises - Conducted an audit, presumably, in terms of Section 64(4) of the Tamilnadu Value Added Tax Act, 2006 - officials from the office had forcibly collected two cheques (Tax Due) - Held that - The powers conferred, U/s 64(4) of the Tamilnadu 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. In view of the above, the first respondent is directed to return the cheques, bearing Nos.539659 and 539660, dated 16.3.2012, to the petitioner, within a period of ten days from the date of receipt of a copy of this order, as the respondents and their officials do not have any power or authority to collect the cheques at the time of the inspection of the premises of an assessee - The writ petition is ordered accordingly

Summary

Issues:
1. Jurisdiction of Enforcement Wing officials to collect tax during inspection without verification of monthly returns.
2. Authority of respondents to collect tax from the petitioner.
3. Relief sought by the petitioner under Article 226 of the Constitution of India.

Analysis:
1. The petitioner, a registered dealer, was subjected to a spot inspection by the second respondent's officials. The inspection revealed an alleged omission in tax payment for the assessment years 2009-2010 and 2010-2011 under the Tamilnadu Value Added Tax Act, 2006. Despite the petitioner's explanation, the officials collected two cheques totaling Rs.9,05,602 on the spot. The petitioner challenged this action, contending that the Enforcement Wing officials lacked the authority to collect tax during the inspection without verifying the monthly returns before completing the assessment.

2. The court considered the provisions of Section 64(4) of the Tamilnadu Value Added Tax Act, 2006, which do not explicitly grant the power to collect tax directly during an inspection. The petitioner sought relief under Article 226 of the Constitution of India, specifically a Writ of Mandamus directing the first respondent to refund the collected amount. The respondents did not contest the petitioner's assertions, leading the court to order the return of the cheques to the petitioner within ten days, emphasizing that the officials lacked the power to collect tax during the inspection.

3. The judgment clarified that while the first respondent must return the cheques promptly, they retain the authority to issue appropriate assessment orders for the relevant years within four weeks. The court's decision was in favor of the petitioner, granting the requested relief under Article 226 without imposing any costs. The judgment highlighted the limits of authority for tax collection during inspections and affirmed the importance of following due process in tax assessments under the law.