2018 (2) TMI 1169 - HC - VAT and Sales Tax

Jurisdiction - whether the Joint Commissioner is empowered to issue such an authorisation in terms of Section 64 (4) of the Act in terms of the statutory provisions, audit can be ordered only by the Commissioner? - Held that - the audit has been authorised by the Joint Commissioner, who has no jurisdiction to do so - identical issue decided in the case of M/s. Jeevan Buy N. Save Versus The Joint Commissioner (CT), The Commercial Tax Officer, The Assistant Commissioner (CT) 2017 (2) TMI 180 - MADRAS HIGH COURT , where it was held that The jurisdiction to conduct VAT audit, which was authorised by the Joint Commissioner was not accepted by the petitioner and therefore, the assessment orders passed were also without jurisdiction. The impugned assessment order and the Value Added Tax audit report are set aside - petition allowed.

Summary

Issues:
Challenge to assessment order based on Value Added Tax Audit authorized by Joint Commissioner not empowered under Section 64(4) of Tamil Nadu Value Added Tax Act, 2006.

Analysis:
The petitioner contested an assessment order issued by the 4th respondent for the years 2012-13 to 2015-16, arguing that the orders stemmed from a Value Added Tax Audit authorized by a Joint Commissioner lacking the authority under Section 64(4) of the Act. The petitioner's statement recorded during the audit referenced the authorization by the Joint Commissioner, raising the question of the Commissioner's exclusive power to order audits. The court referred to a previous case where similar issues were deliberated (WP.No.32566 and 32641 to 32645 of 2016 dated 11.01.2017).

The court analyzed Section 64(4) of the Act, emphasizing that only the Commissioner can order audits of registered dealers through officers not below the rank of Deputy Commercial Tax Officer based on specific criteria outlined in the provision. It was argued that the Commissioner could not delegate this power to the Joint Commissioner, as evidenced by the proceedings dated 16.05.2014. The court noted that the Joint Commissioners of the Enforcement Wing were tasked with authorizing officers for audits, which was not in line with the statutory provision.

The court considered the petitioner's refusal to sign the audit statement and the lack of acquiescence, leading to the conclusion that the assessment orders based on the unauthorized audit lacked jurisdiction. Relying on previous court orders and legal principles, the court allowed the writ petition, setting aside the assessment orders and the Value Added Tax audit report. The respondents were granted liberty to conduct a fresh audit, if necessary, and pass new assessment orders in compliance with the law. No costs were awarded, and pending applications were closed accordingly.

In summary, the judgment highlighted the importance of adherence to statutory provisions regarding the authorization of audits by the appropriate authority, emphasizing that assessments based on unauthorized audits lack legal validity and jurisdiction. The court's decision to set aside the assessment orders and grant liberty for a fresh audit underscored the necessity of procedural compliance in tax assessments.