2017 (8) TMI 762 - HC - VAT and Sales Tax

Jurisdiction - input tax credit - whether the VATO (Audit) can pass an assessment order in terms of the Delhi Value Added Tax Act 2004? - Held that - Chapter X of the DVAT Act deals with the audit investigation and enforcement. Under Section 58 (1) of the DVAT Act the Commissioner may serve on any person a notice informing that an audit shall be performed and an assessment already abated with the reopening. In terms of Section 58 (3) the person on whom the notice is served is expected to provide all cooperation and reasonable assistance as may be required to conduct the audit proceedings. Section 58 (4) states that the Commissioner shall after considering the return the evidence furnished with the returns if any the evidence acquired in the course of audit if any or any information otherwise available to him either confirm the assessment under review or serve a notice of the assessment or re-assessment of the amount of tax interest and penalty pursuant to Sections 32 and 33 of the DVAT Act. Therefore Section 58 (4) itself contemplates the auditor carrying out an assessment or re-assessment as the case may be in terms of Sections 32 and 33 of the DVAT Act. At the time when the impugned orders of default assessment of tax interest and penalty were passed by the VATO (Audit) in the present case the above order was in force. It is a validly issued order and is not a subject matter of challenge in the present proceedings. The above order delegates to the VATO all the powers of an auditor under Section 58 of the DVAT Act for (a) confirming the assessment under review or (b) serving a notice of assessment or re-assessment - in the present case the impugned orders of default assessment of tax interest and penalty issued by the VATO (Audit) were validly issued and were within his powers and jurisdiction in terms of Section 58 (1) read with Section 58 (4) and Section 66 read with Section 68 of the DVAT Act. Under the OVAT Act the officer undertaking the audit has to forward the report to the assessing officer who then in terms of Section 42 of the OVAT Act makes an audit assessment . The position under Section 58 of the DVAT Act is very different - appeal dismissed - decided against assessee.

Summary

Issues Involved:
1. Jurisdiction of VATO (Audit) to pass an assessment order under the Delhi Value Added Tax Act, 2004.

Analysis:

Issue 1: Jurisdiction of VATO (Audit) to pass an assessment order under the Delhi Value Added Tax Act, 2004

The case involved an appeal by the Assessee against an order dismissing their appeal regarding default assessment of tax, interest, and penalty under the Delhi Value Added Tax Act, 2004. The Appellant, engaged in trading auto parts, had their input tax credit claim rejected for certain quarters of 2008-09. The Appellant did not raise the issue of jurisdiction of VATO (Audit) during previous proceedings. However, the Court allowed the Appellant to raise this issue, emphasizing that the person conducting the audit should not make the assessment.

The Court analyzed Section 58 of the DVAT Act, which deals with audit procedures. It was noted that the Commissioner can delegate audit powers to Value Added Tax authorities. In the present case, the Commissioner had delegated powers to the VATO for confirming assessments or serving notices of assessment/re-assessment. The Court concluded that the impugned orders were validly issued within the VATO's jurisdiction as per the DVAT Act provisions.

The Appellant's reliance on decisions from other tax statutes was deemed irrelevant as the DVAT Act contains specific provisions regarding audit and delegation of powers. The Court distinguished cases from other states with different provisions, emphasizing that under the DVAT Act, the officer conducting the audit can also make the assessment. Therefore, the Court answered the question in favor of the Department, affirmed the AT's order, and dismissed the appeal without costs.

In conclusion, the judgment clarified the jurisdiction of VATO (Audit) to pass assessment orders under the DVAT Act, emphasizing the specific provisions and delegation of powers within the Act, ultimately ruling in favor of the Department and dismissing the appeal.