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2018 (6) TMI 1239 - HC - VAT and Sales TaxJurisdiction - Validity of VAT Audit report - consequential notice issued calling upon the petitioner to produce records on a particular date - Challenge to the VAT Audit is on the ground that it is without jurisdiction, as the VAT Audit has been authorised by the Joint Commissioner and not the Commissioner - principle of delegates non potest delegate. Held that - Mere usage of the expression authorised by the Joint Commissioner in his proceedings, does not mean that the Joint Commissioner has commenced the audit on his own accord. It has to be borne in mind that the statute uses the expression order , and does not use the expression authorise . Thus, what is required under Section 64(4) is an order of the Commissioner and if there is an order to the said effect, then authorisation of lower level officers, by officers subordinate to the Commissioner, cannot be termed as ordering an audit, but it is a proceedings by which the order passed by the Commissioner, is implemented or carried forward. The factual matrix in the present case is different from that of the case dealt with by the Court in Jeevan Buy N.Save 2017 (2) TMI 180 - MADRAS HIGH COURT , in the sense that the name of the petitioner finds place in the proceedings of the Commissioner. The Commissioner has exercised his power under Section 64(4) of the TNVAT Act and it is he who has authorised the VAT Audit. Petition dismissed - decided against petitioner.
Issues Involved:
1. Jurisdiction of the Joint Commissioner to authorize VAT Audit. 2. Compliance with Section 64(4) of the Tamil Nadu Value Added Tax Act (TNVAT Act). 3. Validity of the VAT Audit report and subsequent proceedings. Issue-wise Detailed Analysis: 1. Jurisdiction of the Joint Commissioner to Authorize VAT Audit: The petitioner contended that Section 64(4) of the TNVAT Act empowers only the Commissioner to order and authorize VAT Audits. The VAT Audit in the petitioner’s business was authorized by the Joint Commissioner, which the petitioner argued was illegal and without jurisdiction. The principle of "delegatus non potest delegare" (a delegate cannot further delegate) was invoked, asserting that the Commissioner could not delegate his power to the Joint Commissioner. This argument was supported by references to previous cases, including Jeevan Buy N.Save vs. Commissioner of Commercial Taxes and others, where similar authorizations were deemed without jurisdiction. 2. Compliance with Section 64(4) of the TNVAT Act: The respondents argued that the Commissioner had indeed ordered the VAT Audit as per Section 64(4) of the TNVAT Act through proceedings dated 16.05.2014, which included an annexure listing dealers selected for audit, including the petitioner. The Commissioner authorized the Joint Commissioner to deputize officers for the audit, ensuring compliance with Section 64(4). The respondents clarified that the Commissioner did not delegate his powers but organized the administrative execution of the audit through the Joint Commissioner. 3. Validity of the VAT Audit Report and Subsequent Proceedings: The petitioner’s challenge was based on the assertion that the VAT Audit was unauthorized and thus the report and subsequent notices were invalid. However, the court found that the Commissioner’s proceedings, which included the petitioner’s name, complied with Section 64(4). The court distinguished this case from Jeevan Buy N.Save, noting that in the current case, the Commissioner had authorized the audit, and the Joint Commissioner’s role was merely administrative. Conclusion: The court dismissed the petition, concluding that the VAT Audit was authorized by the Commissioner as required by Section 64(4) of the TNVAT Act. The Joint Commissioner’s involvement was limited to administrative execution, not a delegation of power. The petitioner’s reliance on the term “authorized” in the audit statement was deemed a misunderstanding of the administrative process. The court upheld the validity of the VAT Audit report and subsequent proceedings, finding no merit in the petitioner’s claims. The petitioner was advised to seek remedies in accordance with the law.
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