2018 (5) TMI 281 - HC - VAT and Sales Tax

Whether the statement recorded by the officials of the Enforcement Wing can be put against the petitioner while the Assessing Officer is completing the assessment? - Held that - it is settled that the Assessing Officer is a Quasi Judicial Officer and in exercising his quasi judicial function of completing the assessment he is not bound by the instructions or directions of the higher authorities namely the officials of the Enforcement Wing - Since in the instant case the Assessing Officer acted on the basis of the directions of the higher authorities while completing the assessments the impugned assessment orders are to be quashed. Circular No.29/2015 - Held that - Hon ble Division Bench of this Court in the case of K. Arumuga Mudaliar Vs. Registrar Tamil Nadu Taxation Special Tribunal 2002 (8) TMI 824 - MADRAS HIGH COURT held that clarifications and orders issued by the Commissioner in terms of the power vested in him under the Statute are binding on his subordinates especially where the orders or instructions are favourable to the assessee - in the present case the said circular having been issued after coming into force the Tamil Nadu Value Added Tax Act 2006 is binding on the Assessing Officer especially when it gives the manner in which the assessments are to be made. The matters are remanded to the respondent for a fresh consideration - appeal allowed by way of remand.

Summary

Issues:
Assessment based on inspection findings, rejection of objections by petitioner, consideration of admission before Inspecting Authorities, applicability of circulars and instructions in assessment proceedings.

Analysis:
The petitioner, a dealer in consumer products, challenged assessment orders issued by the respondent following an inspection by Enforcement Wing officials. The respondent proposed to revise assessments for multiple years and levy penalties based on the inspection findings. The petitioner raised objections citing circulars and court decisions, but the respondent rejected these objections and completed the assessment. The petitioner argued that the respondent did not consider their objections and merely relied on defects noted during inspection. The respondent contended that the petitioner's admission before Inspecting Authorities was binding and that the objections should have been raised through appeals rather than writ petitions.

The court analyzed the assessment orders and observed that while detailed, they primarily focused on the defects noted during inspection and the petitioner's alleged admission before the Enforcement Wing officials. The court then delved into the legal principles regarding the admissibility of statements made before different authorities in the context of tax assessments. It distinguished a previous case where a retracted statement was considered, emphasizing the quasi-judicial nature of Assessing Officers. The court concluded that the Assessing Officer in this case acted on directions from higher authorities, which is impermissible, citing a relevant court decision.

Furthermore, the court highlighted the importance of circulars issued by the Commissioner of Commercial Taxes, particularly one related to the treatment of discounts and incentives in sales turnover calculations. The petitioner contended that the assessment was incorrect based on their records, and the court agreed that the circular should have been considered by the Assessing Officer. Referring to another court decision, the court emphasized the binding nature of favorable clarifications and orders issued by the Commissioner on subordinates.

In the final judgment, the court allowed the writ petitions, set aside the impugned orders, and remanded the matters to the respondent for fresh consideration. The court directed a reevaluation of the assessment in accordance with the law, excluding any influence from the Enforcement Wing's report. The court's decision was based on the failure to consider objections, improper reliance on Enforcement Wing directives, and the disregard of binding circulars in the assessment process.