2016 (10) TMI 1377 - HC - VAT and Sales Tax

Seeking a direction to the respondents to return the cheques taken from the petitioner during the inspection conducted by the second respondent in the place of business of the petitioner on 19.9.2016 at 6 PM - HELD THAT - Time and again, this Court held that the officials of the Enforcement Wing cannot collect cheques or even collect tax in the nature of advance tax and this practice has been deprecated and the leading decision on this point is in the case of HOTEL BLUE NILE VERSUS STATE OF TAMIL NADU 1992 (9) TMI 309 - MADRAS HIGH COURT . The action of the second respondent in retaining the cheques issued by the petitioner is not sustainable - Petition allowed.

Summary

Issues:
1. Whether the officials of the Enforcement Wing can collect cheques or tax in the nature of advance tax during inspections?
2. Whether the action of retaining cheques by the second respondent is sustainable under the law?

Analysis:
Issue 1:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, filed a writ petition seeking the return of cheques taken during an inspection. The Court referred to previous decisions, notably the case of Hotel Blue Nile Vs. State of Tamil Nadu, where it was held that officials cannot collect cheques or tax in the nature of advance tax during inspections. The Court reiterated that such practices have been deprecated.

Issue 2:
The Court, based on the legal precedent set in the case mentioned above, found that the action of the second respondent in retaining the cheques issued by the petitioner was not sustainable. Consequently, the Court allowed the writ petition and directed the second respondent to return the cheques within two days from the date of receipt of the order, without imposing any costs. The judgment emphasized the importance of adhering to established legal principles and precedents in matters concerning the collection of cheques during inspections by enforcement officials.