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2018 (9) TMI 887 - HC - VAT and Sales TaxJurisdiction - Power to direct VAT Audit - case of petitioner is that the authorization can be granted only by the Commissioner - Held that - It will be useful to refer to the order passed in M/s.Empress Audio 2018 (6) TMI 1239 - MADRAS HIGH COURT and the reasons as to why the Court rejected the contention raised by the petitioner therein, which is identical to that of the contention raised by the petitioner before this Court - It was held in the case that 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. This submission cannot be considered at this stage in this writ petition, wherein the challenge is to the VAT Audit report and it is well open to the petitioner to raise such contention before the assessing officer, as and when show cause notice is issued - Petition is dismissed.
Issues Involved:
1. Jurisdiction of VAT Audit authorization. 2. Collection of cheques by Enforcement Wing Officers. 3. Discrepancies between Profit & Loss account and VAT returns. Detailed Analysis: 1. Jurisdiction of VAT Audit Authorization: The petitioner challenged the VAT Audit conducted by the second respondent, arguing it was without jurisdiction since the authorization should be granted only by the Commissioner. The court referred to a similar case, M/s. Empress Audio vs. Commissioner of Commercial Taxes, where the same contention was rejected. The petitioner acknowledged that the previous decision applied to their case, necessitating the failure of their challenge. The court examined Section 64(4) of the TNVAT Act, which allows the Commissioner to order an audit of a registered dealer's business by an officer not below the rank of Deputy Commercial Tax Officer. The petitioner argued that the Commissioner’s power could not be sub-delegated. However, the court found that the Commissioner had indeed authorized the VAT Audit and that the Joint Commissioner’s role was limited to deputing officers to conduct the audit, not authorizing it. The court concluded that the VAT Audit was authorized correctly by the Commissioner, dismissing the petitioner's claim. 2. Collection of Cheques by Enforcement Wing Officers: The petitioner pointed out that during the inspection, the officers collected four cheques totaling ?10,00,000/-. The court noted that it is a settled legal principle that Enforcement Wing Officers are not entitled to collect taxes from the dealer as advance tax. The court referenced the decision in Hotel Blue Nile vs. State of Tamil Nadu, which held that such collection is without jurisdiction. Consequently, the court directed the respondents to return the cheques to the petitioner. 3. Discrepancies Between Profit & Loss Account and VAT Returns: The petitioner argued that the discrepancies between the Profit & Loss account and the VAT returns were due to inflated figures provided for obtaining a bank loan, and there was no intent to evade taxes. The court stated that this submission could not be considered at this stage in the writ petition. The petitioner could raise this contention before the assessing officer when a show cause notice is issued. Conclusion: The writ petition was dismissed, with the court directing the respondents to return the cheques collected during the inspection. The fifth respondent was instructed to issue a show cause notice to the petitioner, allowing them to submit objections and be heard before any final order. The court emphasized that the VAT Audit was authorized correctly by the Commissioner, and the collection of cheques by the Enforcement Wing Officers was without jurisdiction.
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